SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-K
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

For the fiscal year ended July 31, 2002           Commission File Number 0-12927

                         NATIONAL HOME HEALTH CARE CORP.
             (Exact name of Registrant as specified in its charter)

            Delaware                                            22-2981141
--------------------------------                           ---------------------
 (State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

    700 WHITE PLAINS ROAD, SCARSDALE, NEW YORK                      10583
--------------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code: 914-722-9000

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act: common stock, par
value $.001 per share.

Indicate  by check  mark  whether  the  Registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934,  as amended,  during the  preceding 12 months (or for such shorter  period
that registrant was required to file such reports),  and (2) has been subject to
such filing requirements for the past 90 days.

                  Yes     X                                    No
                          -                                         -----

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge in definitive  proxy or information  statements,
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of October 25, 2002,  the  aggregate  market value of the common stock of the
Registrant,  its only class of voting securities,  held by non-affiliates of the
Registrant was approximately $26,118,467, calculated on the basis of the average
of the closing bid and asked prices of such stock on the National Association of
Securities  Dealers Automated  Quotation System on that date, as reported by the
National Association of Securities Dealers, Inc.

The number of shares outstanding of the Registrant's common stock on October 25,
2002 was 5,553,480.

Portions of the  Registrant's  Proxy  Statement  for its 2002 Annual  Meeting of
Stockholders are incorporated by reference in Part III hereof.



<PAGE>

                                     PART I

ITEM 1.    BUSINESS.

GENERAL

     National Home Health Care Corp. (the  "Company") is a Delaware  corporation
which was  incorporated  in 1983 and completed its initial public  offering that
year.  Formerly Family Treatment Centers of America,  Inc. and then National HMO
Corp.,  in 1991 the Company  changed its name to National Home Health Care Corp.
The  Company is a provider  of home  health  care and  staffing  services in the
Northeast region.

     The Company has seven principal operating subsidiaries:

     o Health  Acquisition  Corp.,  formerly  Allen Health Care  Services,  Inc.
("Allen Health  Care"),  a New York  corporation  that conducts home health care
operations in New York.

     o New England Home Care, Inc. ("New  England"),  a Connecticut  corporation
that conducts home health care operations in Connecticut.

     o Accredited Health Services, Inc. ("Accredited"), a New Jersey corporation
that conducts home health care operations in New Jersey.

     o Connecticut Staffing Works Corp. ("Connecticut  Staffing"), a Connecticut
corporation that conducts healthcare staffing operations in Connecticut.

     o Impressive Staffing Corp. ("Impressive Staffing"), a New York corporation
that conducts healthcare staffing operations in New York.

     o New Jersey  Staffing Works Corp.  ("New Jersey  Staffing"),  a New Jersey
corporation that conducts healthcare staffing operations in New Jersey.

     o Medical  Resources Home Health Corp.  ("Medical  Resources"),  a Delaware
corporation that conducts home health care operations in Massachusetts.

     In January 1996, the outpatient  medical  service  business of the Company,
formerly  known as Brevard  Medical  Center,  Inc. and First Health,  Inc.,  was
reorganized  as  SunStar   Healthcare,   Inc.   ("SunStar"),   a   newly-formed,
wholly-owned  subsidiary  of the Company.  In May 1996,  SunStar  completed  its
initial public  offering (thus  reducing the Company's  ownership  percentage in
SunStar to  approximately  37.6%)  following a complete change in management and
the adoption of a business plan by new  management  for the  establishment  of a
health maintenance organization. As a result, SunStar was no longer consolidated
with the Company for  accounting  purposes  and the  Company  accounted  for its
investment in SunStar using the equity method of  accounting.  During the fiscal
year ended July 31, 1998,  the  Company's  ownership  percentage  in SunStar was
reduced to 30.5% as a result of the issuance by SunStar of additional  shares of
its common  stock  pursuant to a private  placement.  As of July 31,  2002,  the
Company's  ownership  percentage in SunStar was


                                      -2-

<PAGE>

21.6% and the Company's  value of its  investment in SunStar was $0. In February
2000, SunStar's sole operating subsidiary effectively discontinued operations.

Health Acquisition Corp.
------------------------
d/b/a Allen Health Care Services
--------------------------------

     In October 1986, the Company acquired all of the outstanding  capital stock
of Allen  Health Care.  Allen Health Care is a provider of personal  home health
care  services in New York State.  Services are provided by  registered  nurses,
personal   care  aides,   home  health  aides  and   homemakers   (collectively,
"caregivers"). Allen Health Care is licensed by the Public Health Council of the
State  of New York  Department  of  Health.  Allen  Health  Care  maintains  its
principal  administrative  office in Jamaica, New York and has branch offices in
Lindenhurst  and Mount  Vernon,  New York.  Case  coordinating  of  patients  is
performed at these three offices. In addition, the company has satellite offices
in  Brooklyn,  Hempstead  and the Bronx,  New York.  The  satellite  offices are
primarily used for the recruitment  and training of home health aides.  Services
are  provided  in the  following  counties  in the  State of New  York:  Nassau,
Suffolk, Westchester, Queens, Kings, New York and the Bronx.

     Home health care  personnel  are licensed or agency  certified  under a New
York State  approved  program and can be engaged on a  full-time,  part-time  or
live-in  basis.  Since July 1996,  Allen  Health Care has  required  residential
criminal  background  investigations for all new personnel.  In addition,  urine
drug testing is part of the  pre-employment  screening  process and is performed
annually  and  randomly  thereafter.  In  March  2002,  Allen  Health  Care  was
re-surveyed   by  the  Joint   Commission  of   Accreditation   of  Health  Care
Organizations  ("JCAHO"),  an accrediting body for health care providers.  JCAHO
accreditation  is associated  with providing  quality  services.  This status is
required by many of the  certified  home health care  agencies that Allen Health
Care currently  services.  The re-survey resulted in Allen Health Care extending
its accredited status through the year 2005.

     Allen Health Care is  reimbursed  primarily  by certified  home health care
agencies  ("CHHAs") and long-term health care provider programs that subcontract
their  patients  to Allen  Health  Care,  as well as by  private  payors and the
Nassau, Suffolk and Westchester Counties Departments of Social Services Medicaid
Programs, for which Allen Health Care is a participating provider.

     Allen  Health  Care  provides  home  health  care  services  to its clients
twenty-four  hours per day,  seven days per week.  Although  Allen Health Care's
offices  are  open  during  normal  business  hours,   personnel  are  available
twenty-four hours per day to respond to emergencies and to provide other service
requests.  The  registered  nurses of Allen Health Care, in accordance  with New
York State  Department of Health  regulations and contract  requirements,  visit
patients  regularly and review  records of service  completed by the home health
aide and  personnel  care aides daily.  These  records are  maintained  by Allen
Health  Care.  In addition,  a home care  coordinator  ensures that  appropriate
coverage is  maintained  for all patients  and acts as the liaison  among family
members, aides and professional staff.

     Allen  Health  Care  has  expanded  in  recent   years   through   selected
acquisitions of complementary  businesses or assets in its geographic region. In
March 1997,  Allen Health Care  completed the  acquisition  of certain assets of
C.J.  Home Care,  Inc.,  d/b/a Garden City Home Care, a



                                      -3-
<PAGE>

New York  licensed  home  health  care  agency  that  provided  home health aide
services in Nassau  County,  New York. In May 1997,  Allen Health Care completed
the acquisition of certain assets of Home Health Aides,  Inc. and H.H.A.  Aides,
Inc.,  two New York licensed home health care agencies that provided home health
aide  services  in both  Nassau  and  Suffolk  Counties,  New York.  The  latter
acquisition  gave the Company an entree  into the Shared Aide  Program in Nassau
County.  The Shared Aide Program is a program for Medicaid  patients that brings
together a group of home health  aides to care for  patients  in one  geographic
area, thus increasing operating efficiencies and reducing costs.

     In August 1998,  Allen Health Care  completed  the  acquisition  of certain
assets of Bryan Employment Agency,  Inc., d/b/a Bryan Home Care Services ("Bryan
HomeCare"),  a New York  licensed  home health care  agency that  provided  home
health aide services in Westchester  County, New York. The acquisition  expanded
the  geographic  presence  of Allen  Health  Care  and  enabled  it to  become a
participating  provider in the Westchester  County Department of Social Services
Medicaid Program.

     To a large extent,  Allen Health Care's  continued growth depends on, among
other things,  its ability to recruit and maintain  qualified  personnel.  Allen
Health  Care's  training  programs for home health aides and personal care aides
have been approved by the New York State Department of Health. Allen Health Care
believes that it offers  competitive  salaries and fringe  benefits and has been
able to keep its home health aides working on a steady basis.

New England Home Care, Inc.
---------------------------

     In August 1995, the Company acquired New England. New England is a Medicare
certified  and  licensed  home health care company in  Connecticut.  In November
2001, New England was re-surveyed by JCAHO,  resulting in New England  extending
its accredited  status through 2004. New England  provides  services  throughout
Connecticut.  Services include skilled nursing,  physical therapy,  occupational
therapy,  medical social services,  home health aide and homemaker services.  In
addition, New England provides specialty services consisting of adult/geriatric,
pediatric,  post-acute  rehabilitation,  behavioral  medicine and maternal/child
health. New England provides full-service home health care twenty-four hours per
day, seven days per week. Weekends, holidays and after-hours are supported by an
on-call system for each office location with medical supervision by a registered
nurse at all times.  All home  health  care  personnel  are  licensed  or agency
certified  under a  Connecticut  state-approved  program and can be engaged on a
full-time,  part-time or live-in  basis.  Since 1995,  New England has performed
criminal background investigations on all new personnel.

     New  England  maintains  its  principal  administrative  office in Milford,
Connecticut.  In addition,  New England has an administrative office in Cromwell
and satellite offices in Norwalk, Hamden, Waterbury,  Danbury, Hartford, Norwich
and Guilford,  Connecticut.  Case  coordinating  of patients is performed at the
Milford  administrative  office.  The  satellite  offices  are used as  drop-off
offices for paperwork,  recruitment,  in services and  orientation of personnel.
Reimbursement  for  New  England's   services  is  primarily   provided  by  the
Connecticut  Medicaid  Program,  the  Federal  Medicare  Program,  managed  care
companies,  private  payors,  hospices and other Medicare  certified home health
agencies and long-term  care providers  that  subcontract  their patients to New
England.

     New England has expanded its operations  through  increased  penetration of
market share in Connecticut and selected acquisitions of complementary assets in
its geographic  region. In



                                      -4-
<PAGE>

November 1999, New England  acquired  certain assets of Optimum Care Services of
Connecticut,  Inc.,  Optimum Home Health of  Connecticut,  Inc. and Optimum Home
Care of Connecticut,  Inc. (collectively,  the "Optimum Entities").  The Optimum
Entities  included a Medicare  certified  and licensed  home health care company
engaged in providing home health care services in  Connecticut.  The assets were
acquired from a court-appointed  Chapter 7 trustee.  The final purchase price of
$4,400,000 in cash was determined  through an auction  process  conducted at the
United  States  Bankruptcy  Court  for  the  District  of   Massachusetts.   The
acquisition  of these assets was coupled with a  successful  penetration  of the
market  share  made  available  as a result of the  liquidation  of the  Optimum
Entities.

     In April  2000,  New England  acquired  certain  assets of the  Connecticut
operations of U.S.  HomeCare  Corp.  ("U.S.  HomeCare-Connecticut"),  a Medicare
certified and licensed home health care company engaged in providing home health
care services in Connecticut, for $300,000 in cash. The acquisition complemented
the Company's existing operations in Connecticut.

     The continued  growth of New England  depends on, among other  things,  its
ability to recruit  and  retain  qualified  personnel.  New  England's  training
program  for  home  health  aides  has  been   approved   under  a   Connecticut
state-approved  program. New England primarily recruits nurses through newspaper
advertisements.  New England  believes that it offers  competitive  salaries and
fringe  benefits  and has been able to keep its  employees  working  on a steady
basis.

     New England,  as a participant  in the Medicare and Medicaid  programs,  is
subject to survey and audits of operational, clinical and financial records with
respect to proper applications of general regulations governing operations, cost
reporting  and  billing  of  claims.  These  audits  can  result in  retroactive
adjustments for payments  received from these programs  resulting in amounts due
to governmental agencies.

Connecticut Staffing Works Corp.
--------------------------------

     Connecticut  Staffing was  organized in October 1999 to operate  certain of
the assets acquired from the Optimum Entities.

     Connecticut  Staffing is a full-service  health care staffing  company.  It
provides  temporary  staffing to hospitals,  skilled  nursing  facilities,  home
health  organizations  and schools and other  institutions.  Staffing  personnel
include  registered  nurses,   licensed  practical  nurses,   certified  nursing
assistants,  home health aides, homemakers,  opticians,  medical secretaries and
emergency medical technicians.  The company maintains its administrative  office
in Cromwell,  Connecticut.  Staffing services are provided twenty-four hours per
day, seven days per week. Staffing coordinators are in the office from 6 a.m. to
10 p.m.  Weekends,  holidays and after hours are supported by an on-call  system
which pages a staffing coordinator.

     The  company  maintains  a roster of quality  professional  personnel.  The
continued  success of Connecticut  Staffing is dependent on, among other things,
its ability to maintain  its steady  roster of per diem  workers for meeting the
staffing  requirements  of its  clients.  The  company  believes  that it offers
competitive salaries and fringe benefits and has been able to keep its personnel
working on a steady basis.




                                      -5-
<PAGE>


Accredited Health Services, Inc.
--------------------------------

     In October 1998, the Company acquired Accredited.  Accredited is a licensed
home health care company  that  provides  home health aide  services and skilled
nursing services in Bergen, Hudson,  Passaic, Essex, Morris, Union, Somerset and
Middlesex   Counties,   New   Jersey.   Accredited   maintains   its   principal
administrative  office in  Hackensack,  New  Jersey  and has a branch  office in
Verona,  New Jersey.  Case  coordinating  of patients is  performed  in both the
Hackensack and Verona offices.

     Accredited  provides home health care  services to its clients  twenty-four
hours per day,  seven days per week.  Weekends,  holidays  and  after-hours  are
supported  by an  on-call  system for each  office.  All home  health  aides are
licensed  under a New  Jersey  state-approved  program  and can be  engaged on a
full-time, part-time or live-in basis. In March 2002, Accredited was re-surveyed
by the Commission on Accreditation for Home Care (CAHC),  one of the accrediting
bodies required for  participation  as a Medicaid  provider in New Jersey.  This
accreditation   was  extended  for  an  additional   year.   Reimbursement   for
Accredited's  services is primarily by the state of New Jersey Medicaid Program,
Medicare  certified home health care agencies that subcontract their patients to
Accredited and private payors.

     In August 2000,  Accredited  completed the acquisition of certain assets of
Health Force Owned,  Ltd. and its affiliates.  The acquisition  complemented the
Company's  existing  operations  in New Jersey and also expanded its services to
include skilled nursing.

     Accredited's  growth depends on, among other things, its ability to recruit
and retain  qualified  home health  aides.  The company  believes that it offers
competitive  salaries  and  fringe  benefits  and has been able to keep its home
health aides working on a steady basis.

Impressive Staffing Corp.
------------------------

     Impressive Staffing was organized in January 2002 and commenced  operations
in February 2002.

     Impressive  Staffing is a full service  health care and  clerical  staffing
company.  It provides  temporary  staffing to hospitals,  nursing facilities and
radiological facilities.  Staffing personnel include registered nurses, licensed
practical nurses, x-ray technicians, MRI technicians, operating room technicians
and clerical  personnel.  The company  maintains  its  administrative  office in
Hempstead,  New York. Staffing services are provided  twenty-four hours per day,
seven days per week. Staffing coordinators are available in the office Monday to
Friday 8:30 a.m. to 5:00 p.m.  Weekends,  holidays and after hours are supported
by on-call coordinators.

     The  company  maintains  a roster of quality  professional  personnel.  The
growth of Impressive  Staffing is dependent on, among other things,  its ability
to increase  and  maintain a steady  roster of per diem  workers for meeting the
staffing requirements of its clients. The company believes it offers competitive
salaries and fringe benefits and has been able to keep its personnel  working on
a steady basis.




                                      -6-
<PAGE>


New Jersey Staffing Works Corp.
-------------------------------

     New Jersey  Staffing  was  organized in May 2002 and was licensed in August
2002 as a health care service  firm by the  Division of Consumer  Affairs of the
Department of Law and Public Safety of the State of New Jersey.

     New Jersey  Staffing  commenced  operations in September  2002 and offers a
full complement of temporary nursing and paraprofessional services to hospitals,
nursing homes, clinics assisted living facilities,  correctional  facilities and
other  institutions  in northern  and central  New Jersey.  New Jersey  Staffing
personnel include  registered  nurses,  licensed  practical nurses and certified
nursing  assistants.   The  company  maintains  its  administrative   office  in
Hackensack,  New Jersey.  Staffing  services are provided  twenty-four hours per
day, seven days per week.  New Jersey  Staffing  coordinators  are in the office
from 7:00 a.m. to 5:30 p.m. Weekends,  holidays and after hours are supported by
an on-call system.

     The company maintains a roster of quality  professional  personnel that are
interviewed,  screened and monitored  for proper  credentials  under  guidelines
established by leading accredited health care organizations.  The success of New
Jersey  Staffing is dependent on, among other things,  its ability to maintain a
steady roster of per diem workers for meeting the staffing  requirements  of its
clients.  The company  believes that it offers  competitive  salaries and fringe
benefits and has been able to keep its personnel working on a steady basis.

Medical Resources Home Health Corp.
-----------------------------------

     On  September  3, 2002,  the Company,  through a  wholly-owned  subsidiary,
acquired  certain  assets  of  Medical  Resources,  Inc.  and  related  entities
(collectively,  the "Medical  Resources  Entities")  for cash  consideration  of
$2,623,000,  including  acquisition  costs of  $73,000.  The  Medical  Resources
Entities provided home health care services in Massachusetts.

     The   Massachusetts   State  Home  Care   Program   provides   services  to
approximately  33,000 frail,  low income elders  throughout the state. The funds
and  services are managed  through  twenty-seven  Aging  Service  Access  Points
("ASAPs")  that  are  not-for-profit   organizations   geographically  dispersed
throughout  the state.  Services  provided  through this state  program  include
homemaking,  personal care, chore, companion and shopping. Medical Resources has
contracts with seventeen of these ASAPs to provide  homemaking and personal care
services and presently services  approximately  3,100 clients with approximately
425 care givers.  These  services are  provided  seven days per week,  including
weekends,  holidays and after hours.  In addition,  Medical  Resources  provides
grocery shopping and delivery  services to  approximately  600 clients per month
through contracts with seven of the ASAPs.

     Medical Resources maintains its principal  administrative office in Newton,
Massachusetts  and has  satellite  offices in Boston,  Lynn,  Framingham,  North
Andover,  Leominster,  Worcester,  Chicopee,  Bellingham,  North  Dartmouth  and
Easton, Massachusetts.  Case coordinating of patients is performed in Newton and
the satellite  offices.  The satellite offices are also used as drop-off offices
for  paperwork,  recruitment,  in  services,  training  and  orientation  of new
personnel.

     The growth of Medical Resources depends on, among other things, its ability
to recruit and retain staff and the expansion of its existing  services  through
the attainment of both Medicare and



                                      -7-
<PAGE>

Medicaid certification. The company believes that it offers competitive salaries
and fringe benefits and has been able to keep its personnel  working on a steady
basis.

Organization
------------

     The Company's  corporate  headquarters are located in Scarsdale,  New York,
where all senior corporate administrative functions are performed. The Company's
operations  are  conducted  by its seven  operating  subsidiaries.  Although the
Company  maintains  separate   subsidiaries  in  its  various  jurisdictions  of
operations,  it reviews its  operations  primarily on an integrated  rather than
geographic  or   separate-subsidiary   basis.   Each   subsidiary   has  a  main
administrative  office where all management functions are performed and overseen
by the subsidiary President. Each administrative office performs intake and case
coordinating of patients, corporate compliance,  human resources,  marketing and
all financial and accounting functions.

Insurance
---------

     The  Company  and  its  subsidiaries  maintain   professional   malpractice
liability coverage on professionals employed in the rendering of health care and
staffing  services  providing  coverage per  occurrence and in the aggregate and
coverage  for the  customary  risks  inherent  in the  operation  of business in
general.  The Company also carries directors and officers  liability  insurance.
While the Company believes its insurance  policies are adequate,  in the wake of
the  terrorist  events of  September  11,  2001,  the  Company  has  experienced
substantial  increases in the cost of its insurance coverage. As a result, there
can be no  assurance  that  coverage  will  continue to be available in adequate
amounts or at a reasonable cost.

Employees and Labor Relations
-----------------------------

     As of October  25,  2002,  the  Company  had  approximately  3,500 full and
part-time  employees,   of  whom  approximately  23  were  employed  in  various
management  capacities  and five  (5) were  employed  in  marketing  capacities.
Although the Company currently has no union contracts with any of its employees,
a majority of the  employees of Allen Health Care voted in favor of the American
Federation State,  County and Municipal  Employees  ("AFSCME")  District Council
1707 as their collective bargaining representative. Negotiations with that union
have commenced,  although the terms of any collective  bargaining agreement have
not been determined. The Company believes its relationship with its employees is
satisfactory.   The  Company  has   standardized   procedures  for   recruiting,
interviewing  and reference  checking  prospective  health care  personnel.  All
nurses and home  health  aides must be  licensed  or  certified  by  appropriate
authorities.

Risk Factors
------------

     This  section  summarizes  certain  risks,  among  others,  that  should be
considered by  stockholders  and prospective  investors in the Company.  Many of
these  risks  are  discussed  in  other  sections  of this  report.  Some of the
following statements are forward-looking  statements.  See "Item 7. Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Disclosure Regarding Private Litigation Reform Act of 1995."



                                      -8-
<PAGE>

If the  Company is unable to attract  qualified  caregivers  for its home health
care business at reasonable  costs,  it could  increase the Company's  operating
costs and negatively impact its business

     The  Company  relies  significantly  on its  ability to attract  and retain
caregivers who possess the skills, experience and licenses necessary to meet the
requirements of the Company's  customers.  The Company  competes for home health
care services  personnel with other providers of home health care services.  The
Company must  continually  evaluate and expand its network of caregivers to keep
pace with its  customers'  needs.  Currently,  there is a shortage of  qualified
nurses and a  diminishing  pool of home health  aides in the states in which the
Company conducts its business,  competition for nursing  personnel is increasing
and salaries and benefit costs have risen. The Company may be unable to continue
to increase the number of caregivers that it recruits,  adversely  affecting the
potential for growth of the Company's business. The Company's ability to attract
and retain  caregivers  depends  on several  factors,  including  the  Company's
ability to provide such caregivers with assignments that they view as attractive
and with competitive  benefits and salaries.  There can be no assurance that the
Company  will be  successful  in any of  these  areas.  The  cost of  attracting
caregivers and providing  them with  attractive  benefit  packages may be higher
than the Company  anticipates  and,  as a result,  if it is unable to pass these
costs on to its customers, the Company's profitability could decline.  Moreover,
if the  Company is unable to attract and retain  caregivers,  the quality of its
services to its  customers  may decline and, as a result,  it could lose certain
customers.  In addition,  a majority of the  employees of Allen Health Care have
voted in favor of AFSCME District  Council 1707 as their  collective  bargaining
representative.  Negotiations with that union have commenced, although the terms
of any collective bargaining agreement have not been determined. There can be no
assurance  that  the  terms  of any  collective  bargaining  agreement  will not
materially  increase  labor-related  costs or otherwise have a material  adverse
affect on the Company,  that further unionizing activity will not occur at other
subsidiaries  of the Company nor that any such activity will not have a material
adverse effect on the Company.

The Company operates in a highly  competitive  market and its success depends on
its ability to remain  competitive  in obtaining  and  retaining  referrals  and
caregivers

     The home health care business is highly competitive.  Some of the Company's
competitors,  unlike the Company, provide pharmaceutical products and other home
health care services that generate additional  referrals.  Some of the Company's
competitors  also may have greater  marketing and financial  resources  than the
Company.  The Company believes that the primary competitive factors in obtaining
and retaining  customers are the quality of services provided and the pricing of
such  services,  as well as  identifying  qualified  caregivers for specific job
requirements and providing  qualified  employees in a timely manner. The Company
competes  for  caregivers  based  on the  quantity,  diversity  and  quality  of
assignments,  compensation packages and benefits.  Competition for referrals and
caregivers  may increase in the future and, as a result,  the Company may not be
able to remain  competitive.  To the extent  competitors  gain or retain  market
share by reducing prices or increasing marketing expenditures, the Company could
lose  market  share or  otherwise  experience  a  material  adverse  effect.  In
addition,  the  development of alternative  recruitment  channels could lead the
Company's customers to bypass its services, which would also cause the Company's
revenues and margins to decline.



                                      -9-
<PAGE>

The Company's  business depends upon its ability to secure new business from its
customers  because the Company does not have  long-term  agreements or exclusive
contracts with them

     The Company does not have  long-term  agreements  or  exclusive  guaranteed
order  contracts  with its customers.  The success of the Company's  business is
dependent upon its ability to continually secure new business from its customers
and to service such new business with its  caregivers.  The Company's  customers
are free to seek  services  from the  Company's  competitors  and  choose to use
caregivers  that such  competitors  offer  them.  Therefore,  the  Company  must
maintain positive relationships with its customers, otherwise the Company may be
unable to generate new business for its caregivers,  which could have a material
adverse effect on the Company.

Healthcare reform could negatively impact the Company's business opportunities,
revenues and margins

     The U.S.  government has undertaken  efforts to control growing  healthcare
costs through legislation, regulation and voluntary agreements with medical care
providers  and  drug  companies.  In the  recent  past,  the U.S.  Congress  has
considered several comprehensive healthcare reform proposals. The proposals were
generally  intended to expand  healthcare  coverage for the uninsured and reduce
the growth of total  healthcare  expenditures.  While the U.S.  Congress did not
adopt any comprehensive reform proposals,  members of Congress may raise similar
proposals in the future.  If any of these proposals are approved,  the Company's
current  customers may react by spending less on home health care  services.  If
this were to occur, the Company would have fewer business  opportunities,  which
could have a material adverse effect on its business.

     Furthermore,  third  parties  such  as  health  maintenance  organizations,
increasingly  challenge  the prices  charged  for medical  care.  Failure by the
Company's  current  customers  to obtain  full  reimbursement  from those  third
parties could reduce the demand or the price paid for the Company's services.

If  the  Company  is  found  to  be  in   violation  of  Medicare  and  Medicaid
reimbursement  regulations,  it could become subject to retroactive  adjustments
and recoupments

     The Company, as a Medicare and Medicaid provider, is subject to retroactive
adjustments  due to prior year audits,  reviews and  investigations,  government
fraud and abuse initiatives and other similar actions.  Federal regulations also
provide for  withholding  payments to recoup amounts payable under the programs.
While the Company believes it is in material compliance with applicable Medicare
and  Medicaid  reimbursement  regulations,  there can be no  assurance  that the
Company,  pursuant  to such  audits,  reviews  and  investigations,  among other
things,   will  be  found  to  be  in  compliance  in  all  respects  with  such
reimbursement  regulations.  A determination that the Company is in violation of
any such reimbursement  regulations could result in retroactive  adjustments and
recoupments  and have a material  adverse  effect on the Company.  As a Medicaid
provider,  the  Company  also is subject to  routine,  unscheduled  audits.  The
extrapolative methodology,  which applies to all applicable Medicaid revenues an
adjustment factor derived from a statistical  sampling,  used in such audits may
have an adverse  impact on the  Company's  results of  operations.  Although the
audits to date have not resulted in any material  adjustments,  such audits were
based on significantly  lesser Medicaid  revenues.



                                      -10-
<PAGE>

There can be no assurance at this time as to the impact on the Company of future
Medicaid rate changes or audits.

The Company  operates  in a regulated  industry  and changes in  regulations  or
violations of regulations  may result in increased costs or sanctions that could
reduce its revenues and profitability

     The Company is subject to  substantial  and  frequently  changing  federal,
state and local  regulation.  The Company must also comply with state  licensing
along with  federal  and state  eligibility  standards  for  certification  as a
Medicare  and  Medicaid  provider.  In addition,  new laws and  regulations  are
adopted  periodically  to regulate new and existing  services in the health care
industry. Changes in laws or regulations or new interpretations of existing laws
or  regulations  can have a  dramatic  effect on  operating  methods,  costs and
reimbursement  amounts  provided by  government  and other  third-party  payors.
Federal laws governing the Company's  activities  include regulation of Medicare
reimbursement and certification and certain financial  relationships with health
care providers (collectively,  the "fraud and abuse laws"). Although the Company
intends to comply  with all  applicable  federal and state fraud and abuse laws,
these  laws are not  always  clear and may be  subject  to a range of  potential
interpretations.  (For further  discussion on such fraud and abuse laws, see " -
Medicare  Fraud and Abuse").  There can be no assurance that  administrative  or
judicial  clarification or  interpretation  of existing laws or regulations,  or
legislative  enactment  of new laws or  regulations,  will  not have a  material
adverse  effect on the Company.  The Company is subject to state laws  governing
Medicaid,  professional  training,  licensure and financial  relationships  with
physicians.  The  Company's  operations  must comply with all  applicable  laws,
regulations and licensing  standards and all of the Company's  employees who are
caregivers must maintain licenses to provide services offered by the Company. In
addition,  the Balanced  Budget Act of 1997,  as amended (the  "Balanced  Budget
Act"),  introduced  several government  initiatives  causing changes to Medicare
reimbursement, which changes have resulted in the Company experiencing a decline
in revenue from its Medicare  certified nursing agency.  (For further discussion
on the Balanced  Budget Act, see " - Medicare").  There can be no assurance that
federal, state or local governments will not change existing standards or impose
additional  standards.  Any failure to comply with existing or future  standards
could have a material adverse effect on the Company.

Significant legal actions could subject the Company to substantial liabilities

     Provision  of  home  health  care  services  entails  an  inherent  risk of
liability.  Certain participants in the home health care industry may be subject
to lawsuits which may involve large claims and significant  defense costs. It is
expected that the Company periodically will be subject to such suits as a result
of the nature of its  business.  The Company  currently  maintains  professional
liability  insurance  intended to cover such claims in amounts which  management
believes are in accordance  with industry  standards.  There can be no assurance
that the  Company  will be able to obtain  liability  insurance  coverage in the
future on acceptable  terms, if at all. There can be no assurance that claims in
excess  of the  Company's  insurance  coverage  or  claims  not  covered  by the
Company's  insurance  coverage  will not arise.  A successful  claim against the
Company  in excess of the  Company's  insurance  coverage  could have a material
adverse effect on the Company.  Claims against the Company,  regardless of their
merit or  eventual  outcome,  may also  have a  material  adverse  effect on the
Company's ability to attract  customers or to expand its



                                      -11-
<PAGE>

business. In addition, one of the Company's subsidiaries is self-insured for its
workers compensation and is at risk for claims up to certain levels.

The Company is dependent on reimbursement by third-party payors

     For the twelve months ended July 31, 2002, 2001 and 2000, the percentage of
the Company's  revenues derived from Medicare and Medicaid was 50%, 51% and 36%,
respectively.  The revenues and profitability of the Company are affected by the
continuing  efforts of all third-party  payors to contain or reduce the costs of
health  care by lowering  reimbursement  rates,  narrowing  the scope of covered
services,  increasing case management review of services and negotiating reduced
contract pricing. Any changes in reimbursement  levels under Medicare,  Medicaid
or other  payor  sources and any changes in  applicable  government  regulations
could have a material adverse effect on the Company. In particular, although the
Company  does  not  believe  that  any  particular   reimbursement  rate  change
materially  affecting the Company has been  implemented,  quantified or formally
announced,  the Company  believes that certain Medicaid rates in Connecticut may
be reduced some time in 2003.  Material  such  reductions  could have a material
adverse  effect on the  Company.  Changes in the mix of the  Company's  patients
among  Medicare,  Medicaid and other payor sources may also affect the Company's
revenues  and  profitability.  There can be no  assurance  that the Company will
continue to maintain its current payor or revenue mix.

There is no  assurance  that the Company will be able to comply with new federal
health care initiatives, particularly concerning Medicare and Medicaid

     The health care industry  continues to undergo dramatic  changes.  With the
change in  administration,  new federal  health care  initiatives,  particularly
concerning  Medicare  and  Medicaid,  may be launched.  For example,  the Health
Insurance  Portability and Accountability  Act, introduced in 1996, has mandated
an extensive set of  regulations to protect the privacy of  identifiable  health
information, and is currently scheduled to become effective in early 2002. There
can be no assurance that other equally  sweeping federal health care legislation
will not be adopted in the future.  It is also possible  that  proposed  federal
legislation will include language that provides  incentives to further encourage
Medicare  recipients to shift to Medicare  at-risk  managed care programs.  Some
states are adopting  health care programs and  initiatives as a replacement  for
Medicaid.  There can be no assurance  that the adoption of such  legislation  or
other changes in the  administration or  interpretation  of governmental  health
care  programs or  initiatives  will not have a material  adverse  effect on the
Company.

There can be no  assurance  (i) that the  Company  will be able to  successfully
complete the integration of its recent acquisitions and market penetrations,  or
(ii) that the Company would be successful in claims, if any, for indemnification
from sellers in such transactions

     In recent years,  the Company's  strategic  focus was on the acquisition of
small to medium sized home health care providers, or of certain of their assets,
in  targeted  markets.   These  acquisitions   involve   significant  risks  and
uncertainties,  including difficulties  integrating acquired personnel and other
corporate  cultures  into the  Company's  business,  the  potential  loss of key
employees or customers of acquired companies,  the assumption of liabilities and
exposure to unforeseen  liabilities  of acquired  companies and the diversion of
management  attention from existing  operations.  The Company may not be able to
fully  integrate the  operations of the



                                      -12-
<PAGE>

acquired businesses with its own in an efficient and cost-effective  manner. The
failure  to  effectively  integrate  either  of these  businesses  could  have a
material adverse effect on the Company.  In addition,  the Company's growth over
the last  several  years  principally  has been the result of  acquisitions  and
penetration of markets abandoned by competitors.  There can be no assurance that
the Company will be able to identify  suitable  acquisitions or available market
share in the  future nor that any such  opportunities,  if  identified,  will be
consummated on terms favorable to the Company, if at all. In the absence of such
successful  transactions,  there  can be no  assurance  that  the  Company  will
experience  further growth,  nor that such  transactions,  if consummated,  will
result in further growth.

     In  addition,  although  the  Company  attempted  in  its  acquisitions  to
determine  the  nature  and  extent  of any  pre-existing  liabilities,  and has
obtained  indemnification  rights from the previous owners for acts or omissions
arising  prior to the date of the  acquisition,  resolving  issues of  liability
between the parties  could involve a  significant  amount of time,  manpower and
expense on the part of the  Company.  If the Company or any of its  subsidiaries
were to be  unsuccessful  in a claim for indemnity from a seller,  the liability
imposed on the Company or its subsidiary could have a material adverse effect on
the Company.

Difficulties   in  maintaining   the  Company's   management   information   and
communications  systems  may  result in  increased  costs  that may  reduce  the
Company's profitability

     The  Company's  ability to deliver  its home  health  care  services to its
customers  and manage its  internal  systems  depends to a large extent upon the
performance of the Company's management information and communications  systems.
If these systems do not adequately support the Company's  operations,  or if the
Company is required to incur significant  additional costs to maintain or expand
these systems,  its business and financial results could be materially adversely
affected.

The loss of key senior management personnel could adversely affect the Company's
ability to remain competitive

     The Company  believes  that the success of its  business  strategy  and its
ability to operate profitably depends on the continued  employment of its senior
management  team. If any member of the Company's  senior  management team became
unable or unwilling to continue in his present positions, the Company's business
and financial results could be materially adversely affected.

Difficulties and risks resulting from continuing growth.

     The Company has grown significantly over the last three years. This growth,
which has resulted  primarily from acquisitions and which management  intends to
continue to pursue, poses a number of difficulties and risks for the Company. As
the  Company  has grown and may  continue  to grow (as to which  there can be no
assurance) in both revenue and  geographical  scope,  such growth  stretches the
various resources of the Company,  including  management,  information  systems,
regulatory compliance,  logistics and other controls.  There can be no assurance
that such  resources  will keep pace with such  growth.  If the Company does not
maintain such pace, then its prospects would be materially adversely affected.



                                      -13-
<PAGE>

Competition
-----------

     The home health care field is highly competitive in each state in which the
Company operates.  The Company is competing with numerous other licensed as well
as  certified  home  health care  agencies in each of the markets it serves.  In
addition,  the Company  competes with  companies  that, in addition to providing
home health aide and skilled nursing services, also, unlike the Company, provide
pharmaceutical  products  and other home  health  care  services  that  generate
additional referrals. Competition also involves the quality of services provided
and  the  pricing  for  such  services.  As a  result  of  changes  in  Medicare
reimbursement  and the  competitive  pressures of managed care,  the home health
care industry continues to experience  consolidation.  In addition,  the Company
believes  that  smaller,  less  financially  secure  home health  agencies  will
continue  to find it  difficult  to  compete  for market  share and comply  with
regulatory compliance standards.

     The Company's  ability to attract a staff of highly trained  personnel is a
material  element of its business.  There  currently is intense  competition for
qualified  personnel  and there can be no  assurance  that the  Company  will be
successful in maintaining or in securing  additional  qualified  personnel.  The
Company's  competition for personnel comes from other industries as well. If and
to the extent that  reimbursement  rates and other factors  constrain  wages and
other  benefits  to  caregivers,   other  industries  offering  more  attractive
compensation  and other  benefits  also may  attract  eligible  home health care
personnel.   The  Company  recruits  personnel   principally  through  newspaper
advertisements and through referrals from existing personnel.

Customers
---------

     The Company  provides  its services to four types of payor  sources.  These
sources include federal and state funded public  assistance  programs  (Medicare
and Medicaid), other third party payors (subcontracts),  insurance companies and
private payors.

     A substantial portion of the Company's revenue is derived from subcontracts
that the Company has with  Medicare  certified  home  health care  agencies  and
long-term health care provider  programs that subcontract  their patients to the
Company.  From time to time, some of these agencies have requested bids from the
home care agencies to which they  subcontract.  If the Company is not successful
in  maintaining  these  contracts  as they  came up for  bid,  it  could  have a
materially adverse effect on the Company's results of operations.

     One or  more  customers  have  each  accounted  for  more  than  10% of the
Company's  revenue.  For the fiscal  years ended July 31,  2002,  2001 and 2000,
Visiting  Nurse  Service of New York,  a  non-profit  Medicare  home health care
agency,  accounted for 6%, 6% and 10%,  respectively,  of the Company's revenue;
the State of New York Department of Social  Services  personal care aide program
for the counties of Nassau,  Suffolk and  Westchester  accounted for 7%, 10% and
9%,  respectively,  of the  Company's  revenue;  and the  State  of  Connecticut
Department of Social Services medical  assistance program accounted for 32%, 32%
and 17%,  respectively,  of the Company's revenue.  The loss of or a significant
adverse change in the business terms with any of the foregoing  customers  would
have a material adverse effect on the Company.

     Although the Company had been  notified in October  1999 by Visiting  Nurse
Service of New York that commencing in 2000 it would not continue to subcontract
home health aides from



                                      -14-
<PAGE>

Allen Health Care, in each of the last three years Allen Health Care has had its
contract with Visiting Nurse Service of New York renewed.

Government Regulations and Licensing
------------------------------------

     The health care industry is highly  regulated.  The  Company's  business is
subject to substantial and frequently changing regulations by federal, state and
local  authorities.  The Company  must comply  with state  licensing  along with
federal and state  eligibility  standards  for  certification  as a Medicare and
Medicaid provider.

     The ability of the Company to operate  profitably  will depend in part upon
the Company obtaining and maintaining all necessary licenses and other approvals
in compliance with applicable health care regulations.

The Health Insurance Portability and Accountability Act
-------------------------------------------------------

     The Health  Insurance  Portability  and  Accountability  Act  ("HIPAA") was
enacted by the Federal government on August 12, 1996, and requires organizations
to adhere to certain  standards to protect data integrity,  confidentiality  and
availability.  HIPAA also mandates,  among other things,  that the Department of
Health and Human Services adopt standards for the exchange of electronic  health
information in an effort to encourage overall administrative  simplification and
enhance  the  effectiveness  and  efficiency  of the health care  industry.  The
Department of Health and Human Services must adopt standards for the following:

     o    Electronic transactions and code sets;
     o    Unique  identifiers  for  providers,   employers,   health  plans  and
          individuals;
     o    Security and electronic signatures;
     o    Privacy; and o Enforcement.

     Although HIPAA was intended  ultimately to reduce  administrative  expenses
and burdens faced within the health care industry,  the Company believes the law
will initially bring about significant and, in some cases,  costly changes.  The
Department of Health and Human Services has released two rules to date mandating
the use of new standards  with respect to certain health care  transactions  and
health  information.  The first rule  establishes  uniform  standards for common
health care transactions, including:

     o    Health care claims information;
     o    Plan eligibility, referral certification and authorization;
     o    Claims status;
     o    Plan enrollment and disenrollment;
     o    Payment and remittance advice;
     o    Plan premium payments; and
     o    Coordination of benefits.

     Second,  the Department of Health and Human Services has released standards
relating to the privacy of individually  identifiable health information.  These
standards  not  only  require  compliance  with  rules  governing  the  use  and
disclosure of protected health information, but they



                                      -15-
<PAGE>

also  require the Company to impose those  rules,  by contract,  on any business
associate to whom we disclose  protected  information.  The Department of Health
and  Human  Services  has  proposed  rules  governing  the  security  of  health
information, but has not yet issued these rules in final form. The Department of
Health and Human  Services  finalized the  electronic  transaction  standards on
August 17, 2000. Payors are required to comply with the transaction standards by
October  16,  2002 or  October 16 2003,  depending  on the size of the payor and
whether  the payor  requests  a one-year  waiver.  Following  compliance  by its
payors, the Company must comply with the transaction standards, to the extent it
uses  electronic data  interchange.  The Department of Health and Human Services
issued the privacy  standards on December 28, 2000,  and, after certain  delays,
they became  effective  on April 14, 2001,  with a compliance  date of April 14,
2003.  Once the  Department of Health and Human Services has issued the security
regulations in final form, affected parties will have approximately two years to
be fully  compliant.  Sanctions for failing to comply with the HIPAA  provisions
related to health  information  practices  include criminal and civil penalties.
Management is in the process of  evaluating  the effect of HIPAA on the Company.
At this time,  management  anticipates  that the  Company  will be able to fully
comply with those HIPAA requirements that have been adopted. However, management
cannot at this time  estimate  the cost of  compliance,  nor can it estimate the
cost of  compliance  with  standards  that  have not yet been  finalized  by the
Department of Health and Human  Services.  Although the new and proposed  health
information  standards are likely to have a significant  effect on the manner in
which the Company  handles health data and  communicates  with payors,  based on
current knowledge, the Company believes that the cost of our compliance will not
have a material adverse effect on its business,  financial  condition or results
of operations.

Medicare
--------

     Title XVIII of the Social  Security Act  authorizes  Part A of the Medicare
program,  the health  insurance  program that pays for home health care services
for covered persons (typically, those aged 65 and older and long-term disabled).
Home health care providers may  participate in the Medicare  program  subject to
certain  conditions of participation and upon acceptance of a provider agreement
by the Secretary of Health and Human Services.  Only enumerated  services,  upon
satisfaction of certain coverage  criteria,  are eligible for reimbursement as a
Medicare  provider.  The Company is currently Medicare certified in Connecticut.
Approximately 3%, 2% and 6% of revenue for the fiscal years ended July 31, 2002,
2001 and 2000, respectively, were derived from the Medicare program.

     The Balanced  Budget Act was signed into law in August  1997.  The Balanced
Budget Act made  significant  changes in the  reimbursement  system for Medicare
home  health  services.  The  primary  change  that  affects  the  Company  is a
restructuring  of the  reimbursement  system related to Medicare  certified home
care agencies.

     Under the Balanced  Budget Act,  Medicare home care  reimbursement  changes
were scheduled in two phases. A temporary or interim payment system ("IPS") took
effect for cost  reports  beginning  on or after  October  1,  1997.  Under IPS,
Medicare  home  health care  providers  were  reimbursed  the lower of (i) their
actual  costs,  (ii) cost limits based on 105% of median  costs of  freestanding
home health agencies or (iii) an agency-specific per patient cost limit based on
98% of 1994 costs  adjusted for  inflation.  Under IPS, most Medicare  providers
were reimbursed under an  agency-specific  per patient cost limit.  Prior to the
implementation  of IPS, Medicare  reimbursed  providers on reasonable cost basis
subject to  program-imposed  cost per visit  limitations.  Effective



                                      -16-
<PAGE>

October 1, 2000, under the prospective  payment system, the last remaining phase
under the Balanced Budget Act, Medicare now reimburses providers a predetermined
base payment. The payment is adjusted for the health condition and care needs of
the  beneficiary  and also is adjusted for the  geographic  differences in wages
across the country.  Medicare  provides  home health  agencies with payments for
60-day "episodes of care". The 60-day episode is the basic unit of payment.  The
60-day episode  coordinates  with the 60-day physician  re-certification  of the
plan of care and with the 60-day  reassessment of the patient using the Outcomes
and  Assessment  Information  Set  ("Oasis").  Oasis is the  outcome  study that
Medicare   utilized   over  a  two-year   period  to  determine  the  amount  of
reimbursement to providers for each 60-day episode.

     As a  result  of the  changes  to  Medicare  reimbursement  imposed  by the
Balanced  Budget Act,  the  Company  experienced  a decline in revenue  from its
Medicare certified nursing agency. In addition,  the Company's operations in New
York and New  Jersey  are  dependent  upon  referrals  primarily  from  Medicare
certified  agencies,  whose  future  reimbursement  may be  adversely  affected.
Accordingly,  there can be no assurance that the Company's future referrals will
not result in reduced  reimbursement  rates or reduced  volume in  business.  To
date, the impact of the change to the  prospective  payment system has not had a
material effect on the Company's operations.

Medicare Fraud and Abuse
------------------------

     Provisions of the Social Security Act under Medicare and Medicaid generally
prohibit soliciting,  receiving, offering or paying, directly or indirectly, any
form of remuneration in return for the referral of Medicare or state health care
program patients or patient care  opportunities,  or in return for the purchase,
lease or order of any  facility  item or service  that is covered by Medicare or
state health care program. The federal government has published regulations that
provide exceptions,  or "safe harbors",  for business  transactions that will be
deemed not to violate the anti-kickback  statute.  Violations of the statute may
result in civil and criminal  penalties and exclusion from  participation in the
Medicare and Medicaid programs. The Company believes that its current operations
are not in violation of the anti-kickback statute.

Medicaid
--------

     Approximately  47%,  48% and 30% of revenue for the fiscal years ended July
31,  2002,  2001 and 2000,  respectively,  were  derived  from  state  sponsored
Medicaid  programs.  Reimbursement  for home  health care  services  rendered to
eligible Medicaid  recipients is made in an amount determined in accordance with
procedures  and standards  established  by state law under  federal  guidelines.
States differ as to reimbursement  policies and rates. The Company is a licensed
Medicaid  provider  in  Connecticut,  New  Jersey  and in  Nassau,  Suffolk  and
Westchester Counties,  New York. In July 2001, the Company received increases in
Medicaid  reimbursement rates in Connecticut and New Jersey. The Company did not
receive any such increase in reimbursement rates in New York during fiscal 2002.
The Company also did not receive any similar increases in Medicaid reimbursement
rates in Connecticut and New Jersey in July 2002. Future Medicaid  reimbursement
rates may be reduced in response to state economic and budgetary constraints, as
well as in response to changes in the Medicare program.




                                      -17-
<PAGE>


ITEM 2.    PROPERTIES.

     The  Company,  directly or through  certain  subsidiaries,  leases  various
office  facilities under lease agreements with various  expiration dates through
fiscal 2006. The following sets forth the location,  approximate  square footage
and use of each office, and the expiration date of each lease:

<TABLE>
<CAPTION>
                                    Approximate                                           Expiration Date
Location                            Square Feet                    Use                        of Lease
--------                            -----------                    ---                    ---------------

<S>                                    <C>          <C>                                   <C>
Scarsdale, NY                          2,679        Corporate headquarters               October 31, 2003
Queens, NY                            12,300        Administrative office                July  31, 2005
Lindenhurst, NY                        1,250        Branch office                        July 31, 2003
Mount Vernon, NY                       2,500        Branch office                        November 30, 2003
Hempstead, NY                          3,800        Satellite office                     September 30, 2004
Brooklyn, NY                             800        Satellite office                     October 31, 2001
Bronx, NY                                648        Satellite office                     August 31, 2003
Milford, CT                           15,036        Administrative office                September 30, 2002
Cromwell, CT                          14,419        Administrative office                June 30, 2003
Norwalk, CT                            1,400        Satellite office                     March  31, 2004
Hamden, CT                             1,875        Satellite office                     July 31, 2003
Waterbury, CT                          2,000        Satellite office                     October 31, 2003
Danbury, CT                              780        Satellite office                     June 30, 2003
Norwich,  CT                           1,200        Satellite office                     April 30, 2003
Hartford, CT                             989        Satellite office                     April 30, 2002
Waterbury,  CT                         1,200        Satellite office                     October 31, 2003
Guilford, CT                             200        Satellite office                     December 31, 2003
Bridgeport, CT                           588        Satellite office                     April 30, 2002
Hackensack, NJ                         4,281        Administrative office                September 30, 2005
Hackensack, NJ                           852        Satellite office                     September 30, 2005
Verona, NJ                             1,765        Branch office                        October 31, 2001
Newton, MA                             2,496        Administrative office                April 30, 2003
Bellingham, MA                           260        Satellite office                     October 31, 2002
North Andover, MA                        220        Satellite office                     July 31, 2003
Framingham, MA                           525        Satellite office                     November 30, 2002
Boston, MA                               795        Satellite office                     January 31, 2003
Lynn, MA                                 412        Satellite office                     August 31, 2003
North Dartmouth, MA                      964        Satellite office                     January 31, 2003
Chicopee, MA                           1,340        Satellite office                     September 30, 2002
North Easton, MA                         550        Satellite office                     August 31, 2003
Leominster, MA                         1,000        Satellite office                     August 31, 2003
Worcester, MA                          1,365        Satellite office                     August 31, 2003


</TABLE>
     The  Company  believes  that its office  facilities  are  adequate  for the
conduct  of  its  existing  operations.  The  Company  regularly  evaluates  the
suitability  and the  overall  adequacy  of its  various  offices.  The  Company
believes  that it will be able to either (i) renew any leases  that will  expire
during  the  current  fiscal  year or (ii) find  adequate  leases in lieu of any
leases that have expired or will expire during the current fiscal year.



                                      -18-
<PAGE>

ITEM 3.    LEGAL PROCEEDINGS.

     The Company,  certain of its officers and directors  (who  previously  were
outside directors of SunStar) (the "director defendants") and other parties were
named as defendants in In Re SunStar  Healthcare  Securities  Litigation (United
States  District Court for Middle  District of Florida),  a  consolidated  class
action  brought on behalf of a purported  class of  shareholders  of SunStar who
purchased  stock of SunStar  between June 15, 1998 and  December  14,  1999.  In
February  2001,  the Court  dismissed  the  Consolidated  Amended  Complaint and
granted plaintiffs leave to amend. The plaintiffs' Second  Consolidated  Amended
Complaint (the "Complaint") purported to assert claims under sections 10(b) (and
Rule 10b-5 promulgated  thereunder) and 20(a) of the Securities  Exchange Act of
1934, as amended,  based upon alleged acts or omissions of the  defendants  that
allegedly resulted in  misrepresentations  or omissions of material  information
concerning the financial condition of SunStar (and its subsidiary SunStar Health
Plan,  Inc., a Florida HMO presently in  receivership  ("Plan")).  The Complaint
also alleged that the Company (which  allegedly  held 30.5% of SunStar's  common
stock during  SunStar's fiscal year ended July 31, 1998 and reduced its holdings
to approximately 25% in 1999) and the director defendants exercised control over
SunStar and therefore are liable as "controlling persons" of SunStar. In October
2001,  the Court granted the  defendants'  motion to dismiss the Complaint  with
prejudice. Plaintiff's did not appeal from this decision against them.

     In a related action, the director  defendants,  along with thirteen others,
are named as  defendants  in  Department of Insurance of the State of Florida v.
Warren  D.  Stowell  et al.  (Circuit  Court,  Seminole  County,  Florida)  (the
"Seminole  County Action") in which the plaintiff as the receiver of Plan brings
claims  purporting  to arise out of some of the facts  forming  the basis of the
class action described in the paragraph above and other alleged matters relating
to the insolvency of Plan. An amended complaint  relating to the Seminole County
Action was filed on November  17,  2000,  and on February  12, 2001 the director
defendants filed motions to dismiss the Seminole County Action.  On May 7, 2001,
the Court  granted the  director  defendants'  motion to dismiss and granted the
plaintiff  leave to serve a further  amended  complaint.  On July 24, 2001,  the
plaintiff  served an amended  complaint.  On  September  24,  2001 the  director
defendants filed a motion to dismiss the amended  complaint.  In September 2002,
the director defendants (and certain other defendants) entered into a settlement
agreement  with the  plaintiff  in the  Seminole  County  Action to resolve that
action. The aforesaid settlement agreement is subject to court approval.

     The Company  intends to indemnify  the director  defendants  to the fullest
extent  permitted  under its by-laws and applicable  law in connection  with the
actions  described  herein,  subject to independent  Board  members'  review and
action with respect to the final  details of the proposed  settlement  and final
eligibility and entitlement for such indemnification.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

     No matters were submitted to a vote of  stockholders  of the Company during
the fourth quarter of the fiscal year ended July 31, 2002.



                                      -19-
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMPANY'S COMMON STOCK
         AND RELATED STOCKHOLDER MATTERS.

     (a)  Market Information

     The Company's  common stock is quoted on the NASDAQ  National  Market under
the symbol NHHC.  The following  table  presents the quarterly  high and low bid
quotations  in  the  over-the-counter   market,  as  reported  by  the  National
Association  of Securities  Dealers for the two fiscal years ended July 31, 2001
and 2002.  These  quotations  reflect the  inter-dealer  prices,  without retail
mark-up,  mark-down  or  commission  and may not  necessarily  represent  actual
transactions.

                                                               Market Prices
                                                         -----------------------
                                                            High          Low
                                                            ----          ---
Year ended July 31, 2001
------------------------

1st Quarter.........................................        $6.94         $4.50
2nd Quarter.........................................         5.75          5.06
3rd Quarter.........................................         7.31          5.12
4th Quarter.........................................        10.03          6.10


Year ended July 31, 2002
------------------------

1st Quarter.........................................       $19.85        $8.90
2nd Quarter.........................................        17.72        10.74
3rd Quarter.........................................        15.00        10.27
4th Quarter.........................................        16.65         9.34

     (b)  Holders

     There were  approximately  132  holders of record of the  Company's  common
stock as of October 25, 2002,  excluding shares held by depository companies for
certain beneficial owners.

     (c)  Dividends

     The Company has not declared or paid any cash dividends on its common stock
during the last three fiscal  years.  It  anticipates  that for the  foreseeable
future all earnings will be retained for use in its business  and,  accordingly,
it does not  intend  to pay cash  dividends.  On March  13,  2001,  the Board of
Directors of the Company  declared a 5% stock dividend payable on March 23, 2001
to  stockholders  of record on March 16, 2001.  On April 25, 2002,  the Board of
Directors of the Company declared a 5% stock dividend payable on May 17, 2002 to
stockholders of record on May 10, 2002.

ITEM 6.  SELECTED FINANCIAL DATA.

     The following table, which presents selected financial data for the Company
for each of the last five fiscal  years,  has been  derived  from the  Company's
audited Consolidated  Financial



                                      -20-
<PAGE>

Statements.  The data set forth  below  should be read in  conjunction  with the
Consolidated Financial Statements in Item 8 of this Report.


<TABLE>
<CAPTION>
                                                                 Fiscal Years Ended July 31,
                                       --------------------------------------------------------------------------------
                                              2002            2001          2000              1999            1998
                                       --------------------------------------------------------------------------------
   STATEMENT OF OPERATIONS DATA:
<S>                                        <C>             <C>           <C>            <C>              <C>
Revenue...........................      $82,172,000     $74,492,000   $55,574,000    $38,518,000      $34,313,000
Operating expenses................       73,792,000      67,804,000    51,247,000     36,090,000       31,394,000
Income from operations............        8,380,000       6,688,000     4,327,000      2,428,000        2,919,000
Other income (loss):
 Interest income..................          227,000         216,000       220,000        385,000          547,000
  Gain from sale of
   subsidiary's stock............               ---             ---     1,602,000            ---              ---
 Gain from subsidiary's stock
  offering........................              ---             ---           ---            ---          331,000
 (Loss) from equity investee......              ---             ---           ---       (674,000)      (1,630,000)
Income before income taxes........        8,607,000       6,904,000     6,149,000      2,139,000        2,167,000
Provision for income taxes........        3,336,000       2,704,000     2,058,000      1,001,000          964,000
Net income........................        5,271,000       4,200,000     4,091,000      1,138,000        1,203,000
Diluted net income per share of
common stock......................            $0.91           $0.75         $0.74          $0.20            $0.21


<CAPTION>
                                                                       At July 31,
                                    -----------------------------------------------------------------------------------
                                           2002             2001            2000             1999             1998
                                    -----------------------------------------------------------------------------------
BALANCE SHEET DATA:

<S>                                      <C>              <C>             <C>             <C>              <C>
Total assets......................       $43,512,000      $37,250,000     $30,856,000     $26,092,000      $25,503,000
Working capital...................        28,232,000       22,138,000      19,312,000      17,708,000       19,134,000
Retained earnings.................        15,839,000       14,784,000      12,274,000       8,183,000        7,045,000
Stockholders' equity..............        38,679,000       32,584,000      28,486,000      25,013,000       24,281,000

</TABLE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

     The  following  discussion  and  analysis  provides  information  which the
Company's  management believes is relevant to an assessment and understanding of
the Company's  results of operations and financial  condition.  This  discussion
should be read in conjunction  with the  consolidated  financial  statements and
notes appearing elsewhere herein.

     The Company is subject to external factors that could significantly  impact
its business, including potential reductions in reimbursement rates by Medicare,
Medicaid  and  third  party  payors  for  the  Company's  services,  retroactive
adjustments  due to prior year audits,  reviews and  investigations,  government
fraud and abuse  initiatives  and other such factors that are beyond the



                                      -21-
<PAGE>

control of the  Company.  These  factors  could cause  future  results to differ
materially from historical results.

     The  Balanced  Budget Act was signed into law on August 5, 1997.  Under the
Act,  until  October 1, 2000,  Medicare  certified  home  health  agencies  were
reimbursed under an IPS for a two-year period prior to the  implementation  of a
prospective  payment  system.   Under  IPS,  home  health  care  providers  were
reimbursed  the lower of (i) their actual costs,  (ii) cost limits based on 105%
of  median   costs  of   freestanding   home  health   agencies,   or  (iii)  an
agency-specific  per  patient  cost  limit,  based on 1994  costs  adjusted  for
inflation.  Prior to the implementation of IPS, Medicare reimbursed providers on
a reasonable cost basis subject to  program-imposed  cost per visit limitations.
Effective  October 1,  2000,  under the  prospective  payment  system,  the last
remaining phase under the Act, Medicare now reimburses providers a predetermined
base payment. The payment is adjusted for the health condition and care needs of
the  beneficiary  and is also adjusted for the  geographic  differences in wages
across the country.  Medicare  provides  home health  agencies with payments for
60-day  "episodes  of care".  The final piece of the Act called for a 15% cut in
Medicare  reimbursement  effective  October 1, 2002. To date,  the change to the
prospective  payment  system  has not had a  material  impact on  reimbursement;
however,  there  can  be  no  assurance  that  future  reimbursement  under  the
prospective payment system will not result in reduced reimbursement rates.

     The  implementation  of IPS resulted in a decrease in Medicare revenue from
the Company's Medicare certified agency. In addition,  the Company's  operations
in New York and New Jersey are dependent upon referrals, primarily from Medicare
certified  home health care  agencies,  whose  reimbursement  had been adversely
affected.  Under the prospective payment system,  there can be no assurance that
the Company's future referrals will not result in reduced reimbursement rates or
reduced volume of business.

     On August 25, 2000, the Company acquired through  Accredited certain assets
of Health Force. Health Force's operations included the provision of home health
aide and  skilled  nursing  services in  northern  and  central New Jersey.  The
acquisition was accounted for utilizing purchase accounting principles.

     On April 14, 2000, the Company  acquired through New England certain assets
of the  Connecticut  operations  of U.S.  HomeCare-Connecticut,  a licensed  and
Medicare  certified  home health care company in the state of  Connecticut.  The
acquisition was accounted for utilizing purchase accounting principles.

     On  November  1,  1999,   the  Company   acquired,   through  wholly  owned
subsidiaries in Connecticut,  certain assets of the Optimum Entities. The assets
were acquired from a court-appointed Chapter 7 Trustee. The final purchase price
was  determined  through  an auction  process  conducted  at the  United  States
Bankruptcy Court for the District of Massachusetts. The Company is operating the
acquired assets under New England and a recently formed subsidiary,  Connecticut
Staffing.  The Optimum  Entities  had been  engaged in the business of providing
home health care and staffing related  services in Connecticut.  The acquisition
was accounted for utilizing purchase accounting principles.

     On October 30, 1998, the Company acquired all the outstanding common shares
of  Accredited.  Accredited is a licensed home health care



                                      -22-
<PAGE>

company that  provides  home health care  services in Bergen,  Hudson,  Passaic,
Essex,  Morris,  Union,  Somerset  and  Middlesex  Counties,   New  Jersey.  The
acquisition was accounted for utilizing purchase accounting principles.

     SunStar was a publicly traded corporation since May 1996. SunStar, formerly
a wholly owned  subsidiary of the Company,  had comprised the Company's  Florida
outpatient medical center operations. In May 1996, SunStar completed its initial
public offering  following a complete change in management and the adoption of a
business plan by new management for the  establishment  of a health  maintenance
organization.  As a result,  SunStar was no longer consolidated with the Company
for  accounting  purposes.  The  Company  had  utilized  the  equity  method  of
accounting  for its  investment in SunStar.  In February  2000,  SunStar's  sole
operating subsidiary effectively discontinued  operations.  As of July 31, 2002,
the Company's value of its investment in SunStar is $0.

CRITICAL ACCOUNTING POLICIES

     The  Company's  discussion  and  analysis of its  financial  condition  and
results of  operations  are based upon its  consolidated  financial  statements,
which have been  prepared in accordance  with  accounting  principles  generally
accepted in the United States.  The  preparation of these  financial  statements
requires the Company to make  estimates and  judgments  that effect the reported
amounts of assets, liabilities,  revenues and expenses and related disclosure of
contingent  assets and liabilities.  On an on-going basis, the Company evaluates
its estimates,  including,  but not limited to, those  estimates  related to its
allowance for possible losses, asset impairments,  income taxes, commitments and
contingencies  and third payor  liabilities.  The Company bases its estimates on
historical  experience and on various other  assumptions that are believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments  about the carrying values of assets and  liabilities.  Actual
results  may  differ  from  these  estimates  under  different   assumptions  or
conditions.  The  Company  believes  the  accounting  policies  set forth in the
consolidated  financial statements are those policies that are most important to
the  presentation  of its  financial  statements  and such  policies may require
subjective and complex judgments on the part of management.

RESULTS OF OPERATIONS


(% of net patient revenue)                          FISCAL YEAR ENDED JULY 31,
                                                    --------------------------
                                                   2002       2001         2000
                                                   ----       ----         ----
Net patient revenue                                100.0%      100.0%     100.0%

Cost of revenue                                     63.6        65.2       65.6

General and administrative                          25.1        23.7       24.4

Allowance for possible losses                         .1          .8        1.0

Amortization of intangibles                          1.0         1.3        1.2

                                                  -------     ------      ------

Total operating expenses                            89.8        91.0       92.2



                                      -23-
<PAGE>

Income from operations                              10.2         9.0        7.8

Gain from sale of stock of equity investee           ---         ---        2.9

Interest income                                       .3          .3         .4

                                                  -------     ------      ------

Income before income taxes                          10.5         9.3       11.1

Provision for income taxes                           4.1         3.7        3.7

                                                  -------     ------      ------

Net income                                           6.4%        5.6%       7.4%

                                                  =======     ======      ======


YEAR ENDED JULY 31, 2002 COMPARED TO YEAR ENDED JULY 31, 2001

     For the fiscal  year ended  July 31,  2002  ("fiscal  2002"),  net  patient
revenue increased $7,680,000,  or 10.3%, to $82,172,000 from $74,492,000 for the
fiscal year ended July 31, 2001 ("fiscal  2001").  This increase is attributable
to the  expansion of  operations in  Connecticut,  in which net patient  revenue
increased  $5,235,000,  and in New York,  where net  patient  revenue  increased
$1,472,000,  partially attributable to Impressive Staffing Corp. ("Impressive"),
a newly formed  subsidiary of Health  Acquisition  Corp.  that is engaged in the
staffing  and related  personnel to  hospitals,  nursing  homes and  facilities.
Impressive  commenced  operations  in February  and had net  patient  revenue of
$497,000 for fiscal 2002. In addition, net patient revenue increased $973,000 in
New Jersey over fiscal 2001.

     Gross  profit  margin  increased  to 36.4% for  fiscal  2002 from 34.8% for
fiscal 2001.  This increase is primarily  attributable  to increases in Medicaid
reimbursement rates in both Connecticut and New Jersey in July 2001. The Company
experienced  no such increase in  reimbursement  rates in New York during fiscal
2002 nor in  Connecticut  and New Jersey in July 2002.  Medicaid  reimbursement,
like other  third-party  reimbursement,  is subject to rate changes from time to
time that may affect the Company. For example, although as of the date hereof no
particular rate change  materially  affecting the Company has been  implemented,
quantified  or even  formally  announced,  the  Company  believes  that  certain
Medicaid reimbursement rates in Connecticut may be reduced some time in 2003. As
a Medicaid provider, the Company also is subject to routine, unscheduled audits.
The extrapolative methodology, which applies to all applicable Medicaid revenues
an adjustment  factor derived from a statistical  sampling,  used in such audits
may have an adverse impact on the Company's results of operations.  Although the
audits to date have not resulted in any material  adjustments,  such audits were
based on significantly  lesser Medicaid  revenues.  There can be no assurance at
this time that future  Medicaid  rate changes or audits will not have a material
impact on the Company.

     General  and  administrative  expenses  increased  $3,039,000,  or 17.2% to
$20,667,000  from  $17,628,000 in fiscal 2001.  This increase is attributable to
additional  administrative  personnel,  an  increase  in  all  insurance  costs,
professional  fees and occupancy  related costs incurred in connection  with the
expansion  of  operations  in all  service  areas.  The  Company  also  incurred
additional  general and  administrative  costs in connection with the startup of
Impressive and New Jersey Staffing Works Corp. ("New Jersey Staffing"),  a newly
formed  subsidiary  of the



                                      -24-
<PAGE>

Company in New Jersey that is engaged in the staffing  and related  personnel to
hospitals,   nursing  homes  and  facilities.   New  Jersey  Staffing  commenced
operations in September  2002. As a percentage of net patient  revenue,  general
and  administrative  expenses  increased  to 25.2% in fiscal  2002 from 23.7% in
fiscal  2001.  The  increase in general  and  administrative  expenses  over the
periods  includes the increase of $992,000 of such expenses over the  respective
fourth  quarters of such  periods,  which  resulted  from certain  non-recurring
expenses during the recent fourth quarter, including as discussed above.

     Amortization of intangibles decreased  ($410,000),  or (42.9%), to $546,000
in fiscal 2002 from $956,000 in fiscal 2001.  This decrease is  attributable  to
the Company  adopting SFAS No. 141 and 142 in fiscal 2002,  thus  requiring that
the  Company  no  longer  amortize  goodwill,  but  instead  test  goodwill  for
impairment at least annually.

     The Company recorded an allowance for possible losses of $295,000 in fiscal
2002 as compared to $670,000 in fiscal 2001.  The Company had  reserved  against
its accounts receivable in the previous year as a result of the Company entering
into contracts with many new payor sources over the past two years.

     As a result of the foregoing,  income from operations increased $1,692,000,
or 25.3% to $8,380,000 in fiscal 2002 from $6,688,000 in fiscal 2001.

     Interest income increased slightly to $227,000 in fiscal 2002 from $216,000
in fiscal 2001.  The  increase is  attributable  to the higher cash  balances in
fiscal 2002, offset by the continued decline in interest rates.

     The Company's effective tax rate decreased slightly to 38.8% in fiscal 2002
as compared to 39.2% in fiscal 2001.  This decrease is attributable to a decline
in state corporate income tax rates.

     Net income increased $1,071,000,  or 25.5% to $5,271,000, or $.91 per share
in fiscal 2002 from $4,200,000,  or $.75 per share in fiscal 2001. This increase
and the increase in net patient  revenue  over the fiscal year,  as well as over
other  recent  fiscal  years,  is  attributable  principally  to  the  Company's
expansion  of  its  operations  through   penetrations  of  markets  vacated  by
competitors and the successful  integration of the Company's  acquisitions  over
the past three years.  Such  increases  would not be expected to continue at the
same rate,  if at all,  in the  absence of future  such  acquisitions  or market
penetrations, as to which there can be no assurance.

YEAR ENDED JULY 31, 2001 COMPARED TO YEAR ENDED JULY 31, 2000

     For the fiscal  year ended July 31,  2001,  net patient  revenue  increased
$18,918,000,  or 34%, to $74,492,000  from $55,574,000 for the fiscal year ended
July 31, 2000 ("fiscal  2000").  This increase is  attributable to $8,190,000 of
net patient revenue  realized from the expansion of the Company's  operations in
Connecticut  through  the  opportunity  represented  by the  liquidation  of the
Optimum  Entities,  the  acquisition  in November 1999 of certain  assets of the
Optimum Entities, the acquisition of certain assets of U.S. HomeCare-Connecticut
in April 2000 and the successful  penetration of the available  market share. In
addition,  as a result of the  acquisition  of  certain  assets in New Jersey of
Health  Force in August  2000,  the  Company's  net  patient  revenue  increased
$3,538,000 over fiscal 2001.  Further,  the Company's net patient revenue in New
York



                                      -25-
<PAGE>

increased  $7,190,000 as a result of, among other things,  the Company's ability
to capitalize on  additional  market share  resulting  from the  abandonment  of
Health Force's operations there.

     Gross  profit  margin  increased  to 34.8% for  fiscal  2001 from 34.4% for
fiscal 2000. This slight  increase is  attributable to the higher  reimbursement
rates realized from the expansion in the Connecticut and New Jersey markets.

     General  and  administrative  expenses  increased  $4,091,000,  or 30.2% to
$17,628,000  from  $13,537,000 in fiscal 2000.  This increase is attributable to
the additional  general and  administrative  expenses,  consisting  primarily of
additional  administrative  personnel and occupancy  related costs,  incurred in
connection with the expansion into the markets  previously served by the Optimum
Entities,  U.S.  HomeCare-Connecticut  and Health Force.  As a percentage of net
patient  revenue,  general and  administrative  expenses  decreased  to 23.7% in
fiscal 2001 from 24.4% in fiscal 2000.

     Amortization  of intangibles  increased  $296,000,  or 44.8% to $956,000 in
fiscal 2001 from $660,000 in fiscal 2000.  This increase is  attributable to the
amortization  of goodwill and intangibles  associated  with the  acquisitions of
certain assets of the Optimum Entities,  U.S. Home  Care-Connecticut  and Health
Force.

     The Company recorded an allowance for possible losses of $670,000 in fiscal
2001,  as  compared  to  $595,000  in fiscal  2000.  As the  Company has limited
experience  with many of the new payor  sources with which it now contracts as a
result of the Company's  expansion into the new markets in both  Connecticut and
New  Jersey,  the  Company  has  established  a  reserve  against  its  accounts
receivable.  In  addition,  the Company has  experienced  increases  in accounts
receivable  with  certain  of the  Medicare  certified  agencies  with  which it
contracts.  Accordingly, the Company is reserving against accounts receivable in
the event that some of these accounts will have to be written off.

     As a result of the foregoing,  income from operations increased $2,361,000,
or 54.6% to $6,688,000 in fiscal 2001 from $4,327,000 in fiscal 2000.

     Interest income decreased slightly to $216,000 in fiscal 2001 from $220,000
in fiscal 2000.  This decrease is  attributable to the decline in interest rates
during fiscal 2001.

     During fiscal 2000,  the Company  recorded a gain from the sale of stock of
equity  investee  of  $1,602,000  resulting  from the sale of 259,510  shares of
SunStar.

     The  Company's  effective  tax rate  increased  to 39.2% in fiscal  2001 as
compared  to 33.4% in fiscal  2000.  This  increase is  attributable  to a lower
effective  tax rate on the  gain  resulting  from  the  sale of stock of  equity
investee in fiscal 2000.  Excluding the gain resulting from the sale of stock of
equity  investee,  the effective tax rate  decreased  from 41.3% in fiscal 2000.
This  decrease  is the  result  of a  benefit  recorded  in  fiscal  2001 for an
over-accrual of taxes in fiscal 2000.

     Net income increased $109,000, or 2.7% to $4,200,000,  or $.75 per share in
fiscal 2001 from $4,091,000, or $.74 per share in fiscal 2000.



                                      -26-
<PAGE>

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
----------------------------------------------------

     Current assets increased to $33,065,000 and current  liabilities  increased
$167,000 to $4,833,000 at July 31, 2002. This resulted in an increase in working
capital of $6,094,000 to $28,232,000  at July 31, 2002 from  $22,138,000 at July
31, 2001. Cash and cash equivalents  increased $6,259,000 to $15,341,000 at July
31, 2002 from  $9,082,000  at July 31, 2001.  This  increase in cash and working
capital  is  primarily  attributable  to the  net  cash  provided  by  operating
activities.

     Net cash provided by operating  activities was $6,498,000 in fiscal 2002 as
compared  with  $6,535,000  in fiscal  2001.  The  decrease in cash  provided by
operating  activities of ($37,000),  or (1%), is  attributable to an increase in
operating cash flow of $1,450,000,  a decrease in operating  assets of $625,000,
offset by a decrease in operating liabilities of ($2,112,000) over fiscal 2001.

     On September 3, 2002, the Company, through Medical Resources, completed the
acquisition  of  certain  assets  of  the  Medical   Resources   Entities,   for
approximately $2,623,000 in cash, including acquisition costs of $73,000.

     Investing  activities in fiscal 2002 used cash of ($586,000) as compared to
cash used of ($2,185,000) in fiscal 2001. The cash used in investing  activities
in fiscal 2002  consisted  of the purchase of  equipment,  purchase of assets of
businesses and other investing activities. The cash used in investing activities
in fiscal 2001  consisted of the purchase of certain  assets of Health Force and
the purchase of equipment, offset by other investing activities.

     Financing  activities  in fiscal 2002 provided cash of $347,000 as compared
to cash used of  ($124,000)  in fiscal  2001.  The cash  provided  by  financing
activities  in fiscal 2002  consisted of the proceeds from the exercise of stock
options,  offset by the purchase of treasury stock. The cash used in fiscal 2001
reflects  the  purchase  of  treasury  shares  offset by the  proceeds  from the
exercise of stock options.

     The nature of the Company's  business  requires  weekly  payments to health
care personnel at the time services are rendered. The Company typically receives
payment  for  these  services  on a basis  of 90 to 120  days  with  respect  to
contracted  and  insurance  business  and 8 to 45 days with  respect  to certain
governmental payors, such as Medicare and Medicaid programs. Accounts receivable
turnover was 75 days in fiscal 2002, down from 81 days in fiscal 2001.

     On October 24, 2001, the Company closed on a $7,500,000 committed revolving
line of credit facility  ("credit  facility") with its bank. The credit facility
provides  for the  Company  to borrow up to the lesser of  $7,500,000  or 80% of
eligible  accounts  receivable  that are aged less  than 120 days at the  bank's
prime rate or LIBOR plus 2.5%. The credit  facility  expires on October 23, 2003
and requires the Company to meet certain  financial  covenants  and ratios.  The
Company  is  required  to pay .25%  commitment  fee on unused  amounts,  payable
quarterly in arrears.  At July 31, 2002 there was no  outstanding  balance under
the credit facility.

     The Company  intends to meet its short term and long term  liquidity  needs
with its  current  cash  balances,  cash flow  from  operations  and its  credit
facility.



                                      -27-
<PAGE>

     In October 2002,  the Board of Directors  extended for one year its program
to  repurchase  its Common  Stock.  Purchases in the  aggregate  amount of up to
$1,000,000 in purchase  price during the one-year  extension  would be made from
time to time in the open market and through privately  negotiated  transactions,
subject to general  market and other  conditions.  The buyback  program would be
financed out of existing cash or cash equivalents.

     Other than set forth herein,  the Company has no material  commitments  for
capital expenditures.

     In the  opinion  of  management,  there will be no  material  impact on the
financial  statements  of  the  Company  from  any  recently  issued  accounting
standards.

INFLATION AND SEASONALITY
-------------------------

     The rate of inflation had no material effect on operations for fiscal 2002.
The effects of inflation on personnel  costs in the future could have an adverse
effect on operations, as the Company may not be able to increase its charges for
services rendered. The Company's business is not seasonal.

DISCLOSURE REGARDING PRIVATE LITIGATION REFORM ACT OF 1995
----------------------------------------------------------

     Except for  historical  information  contained in this report on Form 10-K,
certain  matters  set  forth  herein  are  forward-looking  statements  that are
dependent on certain risks and  uncertainties,  including  such  factors,  among
others,  as market  acceptance,  pricing  and demand for the  Company  services,
changing  regulatory  environment,   changing  economic  conditions,   risks  in
connection with acquisitions, ability to attract and retain qualified personnel,
ability  to manage  the  Company's  growth,  and  other  risks  detailed  in the
Company's  other  filings  with  the  Securities  and  Exchange  Commission.  In
particular, in addition to the specific regulatory matters described herein, the
Company generally, as a participant in the home health care industry, is subject
to extensive  federal,  state and local  regulations.  There can be no assurance
that any of these  regulations  will not change from  existing  standards,  that
additional  standards  will  not be  imposed  nor  that  the  Company  will  not
experience  adverse  effects as a result of efforts  to comply  with  applicable
standards, which are extensive, complex and often-changing.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     None.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The  financial  information  required  by  this  item is set  forth  in the
Consolidated Financial Statements on pages F-1 through F-33.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
           ON ACCOUNTING AND FINANCIAL DISCLOSURE.

     On June 22, 2001, the Company dismissed Holtz Rubenstein & Co., LLP ("Holtz
Rubenstein") as the Company's independent public accountants.



                                      -28-
<PAGE>

     On June 22, 2001, the Company selected BDO Seidman,  LLP ("BDO Seidman") to
replace Holtz Rubenstein as the Company's  independent public  accountants.  The
decision to change  auditors was approved by the Audit Committee of the Board of
Directors.

     Holtz  Rubenstein's  report on the financial  statements of the Company for
each of the two  fiscal  years  prior to the  resignation  did not  contain  any
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles.

     During  fiscal 1999 and fiscal  2000,  and the  subsequent  interim  period
through June 22, 2001, there were no disagreements  with Holtz Rubenstein on any
matter of accounting principles or practices, financial statement disclosure, or
auditing  scope  or  procedure,  which  disagreements,  if not  resolved  to the
satisfaction  of Holtz  Rubenstein,  would have caused Holtz  Rubenstein to make
reference to the subject  matter of the  disagreements  in  connection  with its
audit report with respect to financial statements of the Company.

     During  fiscal 1999 and fiscal  2000,  and the  subsequent  interim  period
through June 22, 2001,  there was no  disagreement or difference of opinion with
Holtz  Rubenstein  regarding any "reportable  event," as that term is defined in
Item 304(a)(1)(v) of Regulation S-K.

     On June 22,  2001,  the  Company  filed a Current  Report  on Form 8-K,  as
amended (the "Report") and provided Holtz Rubenstein with a copy of this Report,
requesting that Holtz Rubenstein  furnish the Company with a letter addressed to
the SEC stating whether it agreed with the statements made by the Company.  Such
letter was  attached to the Report as Exhibit 16 and is hereby  incorporated  by
reference.

     During  fiscal 1999 and fiscal  2000,  and the  subsequent  interim  period
through June 22,  2001,  neither the Company nor anyone on behalf of the Company
consulted BDO Seidman regarding either the application of accounting  principles
to a specified  transaction,  either completed or proposed, or the type of audit
opinion that might be rendered on the financial statements of the Company or any
matter that was either the subject of a disagreement, within the meaning of Item
304(a)(1)(iv)  of  Regulation  S-K,  or any  reportable  event,  as that term is
defined in Item 304(a)(1)(v) of Regulation S-K.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
         --------------------------------------------------

ITEM 11. EXECUTIVE COMPENSATION.
         ----------------------

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
         --------------------------------------------------------------

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
         ----------------------------------------------

     The  information  required by each of the items of Part III is omitted from
this  Report.  Pursuant  to the  General  Instruction  G(3)  to Form  10-K,  the
information  is included in the  Company's  Proxy  Statement for its 2002 Annual
Meeting  of  Stockholders  to be held  on or  about



                                      -29-
<PAGE>

December 5, 2002, and is incorporated  herein by reference.  The Company intends
to file such Proxy  Statement with the SEC not later than 120 days subsequent to
July 31, 2002.

ITEM 14. CONTROLS AND PROCEDURES
         -----------------------

     Item 14 has been omitted pursuant to the transition  provisions of Exchange
Act Release No. 34-46427.

                                     PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
           -----------------------------------------------------------------

     (a)  The  following  represents  a  listing  of all  financial  statements,
financial statement schedules and exhibits filed as part of this Report.

     (1)  Financial   Statements  (see  index  to  the  consolidated   financial
statements).




                                      -30-

<PAGE>


                         NATIONAL HOME HEALTH CARE CORP.
                                        AND SUBSIDIARIES









                                               CONSOLIDATED FINANCIAL STATEMENTS
                                                       AND SUPPLEMENTAL MATERIAL
                                        YEARS ENDED JULY 31, 2002, 2001 AND 2000




<PAGE>


                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                                        CONTENTS


                                                                            F-2
        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                  F-3
        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                  F-4

        CONSOLIDATED FINANCIAL STATEMENTS:
           Balance sheets                                                   F-5
           Statements of earnings                                           F-6
           Statements of changes in stockholders' equity                    F-7
           Statements of cash flows                                         F-8
           Summary of accounting policies                            F-9 - F-13
           Notes to consolidated financial statements                F-14- F-29

        SUPPLEMENTAL MATERIAL:
           Report of Independent Certified Public Accountants on
              supplemental material                                        F-31
           Report of Independent Certified Public Accountants on
              supplemental material                                        F-32
           Schedule II Valuation and qualifying accounts                   F-33










                                                                             F-2
<PAGE>



REPORT OF BDO SEIDMAN, LLP, INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS



Board of Directors and Stockholders
National Home Health Care Corp.
Scarsdale, New York

We have audited the  accompanying  consolidated  balance sheets of National Home
Health Care Corp. and  Subsidiaries as of July 31, 2002 and 2001 and the related
consolidated  statements of earnings,  changes in stockholders'  equity and cash
flows for the years then ended. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of National Home Health
Care Corp. and  Subsidiaries at July 31, 2002 and 2001, and the results of their
operations  and their cash flows for the years then ended,  in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ BDO Seidman, LLP
--------------------
BDO Seidman, LLP
Valhalla, New York
October 2, 2002



                                                                             F-3
<PAGE>


REPORT OF HOLTZ RUBENSTEIN & CO., LLP, INDEPENDENT
AUDITORS



Board of Directors and Stockholders
National Home Health Care Corp.
Scarsdale, New York

We have audited the accompanying consolidated statements of earnings, changes in
stockholders'  equity and cash flows of  National  Home  Health  Care Corp.  and
Subsidiaries  for the year ended July 31,  2000.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.


We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion the consolidated  financial  statements referred to above present
fairly,  in all material  respects,  the  consolidated  results of operations of
National Home Health Care Corp. and  Subsidiaries  and their  consolidated  cash
flows for the year ended July 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.




/s/ HOLTZ RUBENSTEIN & CO., LLP
-------------------------------
HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
October 3, 2000




                                                                             F-4
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                     CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
 July 31,                                                                                 2002                  2001
 --------------------------------------------------------------------------------------------------------------------
 ASSETS
 CURRENT:
<S>                                                                                <C>                  <C>
    Cash, (including cash equivalents of $13,481,000 and $7,150,000,
       respectively) (Note 8)                                                      $15,341,000          $  9,082,000
    Investments                                                                         35,000                18,000
    Accounts receivable, less allowance for possible losses of $691,000
       and $865,000, respectively (Note 8)                                          16,382,000            15,983,000
    Prepaid expenses and other                                                         778,000             1,199,000
    Income taxes receivable                                                            234,000                     -
    Deferred income taxes (Note 7)                                                     295,000               522,000
 --------------------------------------------------------------------------------------------------------------------
            TOTAL CURRENT ASSETS                                                    33,065,000            26,804,000
 --------------------------------------------------------------------------------------------------------------------
      Furniture, equipment and leasehold improvements, net (Note 1)                    857,000               939,000
 Goodwill (Note 2)                                                                   7,366,000             7,166,000
 Other intangible assets, net (Note 3)                                               1,406,000             1,817,000
 Deferred income taxes (Note 7)                                                        515,000               288,000
 Deposits and other assets                                                             303,000               236,000
 --------------------------------------------------------------------------------------------------------------------
                                                                                   $43,512,000           $37,250,000
 ====================================================================================================================
 LIABILITIES AND STOCKHOLDERS' EQUITY
 CURRENT LIABILITIES:
    Accounts payable and accrued expenses (Note 4)                                $  3,581,000          $  3,268,000
    Estimated third-party payor settlements                                            912,000             1,090,000
    Deferred revenue                                                                   340,000               282,000
    Income taxes payable                                                                     -                26,000
 --------------------------------------------------------------------------------------------------------------------
            TOTAL CURRENT LIABILITIES                                                4,833,000             4,666,000
 --------------------------------------------------------------------------------------------------------------------
 COMMITMENTS AND CONTINGENCIES (NOTE 10)
 STOCKHOLDERS' EQUITY (NOTE 9):
    Common stock, $.001 par value, shares authorized - 20,000,000;
       issued shares- 6,902,819 and 6,491,229, respectively                              7,000                 6,000
    Additional paid-in capital                                                      25,552,000            20,306,000
    Retained earnings                                                               15,839,000            14,784,000
 --------------------------------------------------------------------------------------------------------------------
                                                                                    41,398,000            35,096,000
    Less treasury stock (1,329,979 and 1,310,679 shares)- at cost                    2,719,000             2,512,000
 --------------------------------------------------------------------------------------------------------------------
            TOTAL STOCKHOLDERS' EQUITY                                              38,679,000            32,584,000
 --------------------------------------------------------------------------------------------------------------------
                                                                                   $43,512,000           $37,250,000
 ====================================================================================================================
</TABLE>

See accompanying summary of accounting policies
and notes to  consolidated financial statements.

                                                                             F-5
<PAGE>


                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES




                                             CONSOLIDATED STATEMENTS OF EARNINGS


<TABLE>
<CAPTION>
 Years ended July 31,                                                  2002              2001               2000
 ----------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                <C>               <C>
 NET PATIENT REVENUE (NOTE 8)                                         $82,172,000        $74,492,000       $55,574,000
 ----------------------------------------------------------------------------------------------------------------------
 OPERATING EXPENSES:
    Cost of revenue                                                    52,284,000         48,550,000        36,455,000
    General and administrative                                         20,667,000         17,628,000        13,537,000
    Amortization of intangibles                                           546,000            956,000           660,000
    Allowance for possible losses                                         295,000            670,000           595,000
 ----------------------------------------------------------------------------------------------------------------------
         TOTAL OPERATING EXPENSES                                      73,792,000         67,804,000        51,247,000
 ----------------------------------------------------------------------------------------------------------------------
         INCOME FROM OPERATIONS                                         8,380,000          6,688,000         4,327,000
 ----------------------------------------------------------------------------------------------------------------------
 OTHER INCOME:
    Interest                                                              227,000            216,000           220,000
    Gain from sale of stock of equity investee (Note 5)                         -                  -         1,602,000
 ----------------------------------------------------------------------------------------------------------------------
         TOTAL OTHER INCOME                                               227,000            216,000         1,822,000
 ----------------------------------------------------------------------------------------------------------------------
         INCOME BEFORE INCOME TAXES                                     8,607,000          6,904,000         6,149,000
 PROVISION FOR INCOME TAXES (NOTE 7)                                    3,336,000          2,704,000         2,058,000
 ----------------------------------------------------------------------------------------------------------------------
 NET INCOME                                                          $  5,271,000       $  4,200,000      $  4,091,000
 ======================================================================================================================
 NET INCOME PER COMMON SHARE:
    Basic                                                            $        .96       $        .77      $        .74
 Diluted                                                             $        .91       $        .75      $        .74
 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
    Basic                                                               5,516,689          5,444,035         5,538,426
    Diluted                                                             5,791,911          5,615,414         5,551,556
 ======================================================================================================================
</TABLE>

See accompanying summary of accounting policies
and notes to  consolidated financial statements.





                                                                             F-6
<PAGE>



                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY



<TABLE>
<CAPTION>
                                              Common Stock                                                Treasury Stock
                                         ----------------------                                    -------------------------------
                                                                   Additional         Retained
                                          Shares       Amount    Paid-in Capital      Earnings        Shares            Amount
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>         <C>          <C>             <C>                <C>            <C>
BALANCE, JULY 31, 1999                     6,228,746   $6,000       $18,525,000     $  8,183,000       1,124,936      $(1,701,000)
Net income                                         -        -                 -        4,091,000               -                 -
Acquisition of treasury shares                     -        -                 -                -         151,842         (618,000)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JULY 31, 2000                     6,228,746    6,000        18,525,000       12,274,000       1,276,778       (2,319,000)
-----------------------------------------------------------------------------------------------------------------------------------
Net income                                         -        -                 -        4,200,000               -                 -
Stock dividend declared March 16, 2001       245,983        -         1,690,000       (1,690,000)              -                 -
Exercise of stock options                     16,500        -            69,000                -               -                 -
Tax benefit of stock option exercise               -        -            22,000                -               -                 -
Acquisition of treasury shares                     -        -                 -                -          33,901         (193,000)
-----------------------------------------------------------------------------------------------------------------------------------
Balance, July 31, 2001                     6,491,229    6,000        20,306,000       14,784,000       1,310,679       (2,512,000)
-----------------------------------------------------------------------------------------------------------------------------------
Net income                                         -        -                 -        5,271,000               -                 -
Stock divided declared April 17, 2002        264,211    1,000         4,216,000       (4,216,000)              -                 -
Exercise of stock options                    147,379        -           554,000                -               -                 -
Tax benefit of stock option exercise                        -           476,000                -               -                 -
Acquisition of treasury shares                     -        -                 -                -          19,300         (207,000)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JULY 31, 2002                     6,902,819   $7,000       $25,552,000      $15,839,000       1,329,979      $(2,719,000)
===================================================================================================================================
</TABLE>

See  accompanying  summary  of  accounting  policies
and notes to  consolidated financial statements.






                                                                             F-7
<PAGE>



                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                           CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
Years ended July 31,                                                         2002             2001              2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>            <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                        $  5,271,000      $ 4,200,000       $ 4,091,000
----------------------------------------------------------------------------------------------------------------------
   Adjustments to reconcile net income to cash provided by operating
      activities:
        Depreciation and amortization                                     813,000        1,194,000           881,000
        Gain from sale of stock of equity investee                              -                -        (1,602,000)
        Allowance for possible losses, net of write-offs                  174,000          192,000           281,000
        Deferred income taxes                                                   -         (306,000)          (87,000)
        Unrealized loss on investments                                     49,000                -                 -
        Loss on sale of assets                                                  -           31,000             2,000
        Tax expense realized from the exercise of stock options
           by employees                                                   476,000           22,000                 -
        Changes in assets and liabilities:
              Accounts receivable                                        (573,000)        (328,000)       (3,099,000)
              Prepaid expenses and other                                  354,000         (634,000)         (431,000)
              Income taxes receivable                                    (259,000)        (141,000)          277,000
              Accounts payable and accrued expenses                       313,000        1,065,000         1,124,000
              Estimated third-party payor settlements                    (178,000)         958,000          (132,000)
              Deferred revenue                                             58,000          282,000                 -
----------------------------------------------------------------------------------------------------------------------
              NET CASH PROVIDED BY OPERATING ACTIVITIES                 6,498,000        6,535,000         1,305,000
----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of furniture, equipment and leasehold improvements           (185,000)        (470,000)         (257,000)
   Purchase of assets of businesses                                      (335,000)      (1,737,000)       (4,801,000)
   Proceeds from sale of stock of equity investee                               -                -         1,602,000
   Others                                                                 (66,000)          22,000           183,000
----------------------------------------------------------------------------------------------------------------------
              NET CASH USED IN INVESTING ACTIVITIES                      (586,000)      (2,185,000)       (3,273,000)
----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Purchase of treasury stock                                            (207,000)        (193,000)         (618,000)
   Proceeds from exercise of stock options                                554,000           69,000                 -
----------------------------------------------------------------------------------------------------------------------
              NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES         347,000         (124,000)         (618,000)
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                    6,259,000        4,226,000        (2,586,000)
Cash and cash equivalents, beginning of year                            9,082,000        4,856,000         7,442,000
----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                               $ 15,341,000      $ 9,082,000       $ 4,856,000
======================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for:
      Interest                                                       $     13,000      $     1,000       $    16,000
      Income taxes                                                   $  3,119,000      $ 3,129,000       $ 1,870,000
======================================================================================================================

</TABLE>
See accompanying summary of accounting policies
and notes to  consolidated financial statements.




                                                                             F-8
<PAGE>



                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                  SUMMARY OF ACCOUNTING POLICIES



 BUSINESS                     National Home Health  Care Corp. and  Subsidiaries
                              (the  "Company") is a provider of home health care
                              services,  including nursing care,  personal care,
                              supplemental staffing and other specialized health
                              services in the North  Eastern  part of the United
                              States.


 PRINCIPLES OF                The consolidated financial  statements include the
 CONSOLIDATION                accounts  of  National  Home Health Care Corp. and
                              its  wholly-owned  subsidiaries.  All  significant
                              intercompany  balances and transactions  have been
                              eliminated   in   the    consolidated    financial
                              statements.


 REVENUE  RECOGNITION  AND    Net patient revenues are recorded at estimated net
 ALLOWANCE FOR POSSIBLE       realizable  amounts  from  patients,   third-party
 LOSSES                       payors  and   others  for  services  rendered  and
                              includes estimated retroactive revenue adjustments
                              relating   to   future    audits,    reviews   and
                              investigations. Estimated adjustments are recorded
                              as  reviews  are   completed.   An  allowance  for
                              possible    losses   is   recorded    based   upon
                              management's   evaluation   of  current   industry
                              conditions,  historical  collection experience and
                              other relevant  factors  which,  in the opinion of
                              management,  require recognition in estimating the
                              allowance.

                              Under Medicaid,  Medicare and other  reimbursement
                              programs,  the Company is reimbursed  for services
                              rendered to covered program patients as determined
                              by  reimbursement  formulas  and  regulations.  To
                              date,   the  Company  has  not  had  any  material
                              adjustments to previously  recorded amounts.  Laws
                              and  regulations   governing  these  programs  are
                              complex  and  subject  to  interpretation.   As  a
                              result,  it is possible  that  recorded  estimates
                              will change.

                              Approximately  50%,  51%  and  36% of net  patient
                              revenue for the fiscal  years ended July 31, 2002,
                              2001 and 2000,  respectively,  were derived  under
                              federal   and  state   third-party   reimbursement
                              programs.


                                                                             F-9
<PAGE>
 CASH  AND CASH               For the purposes of the statements  of cash flows,
 EQUIVALENTS                  the Company considers all highly liquid investment
                              instruments  purchased  with a  maturity  of three
                              months or less to be cash equivalents.


 FURNITURE, EQUIPMENT         Furniture,  equipment and  leasehold  improvements
 AND LEASEHOLD                are stated at cost. Depreciation is being provided
 IMPROVEMENTS                 on the straight-line  method   over the  estimated
                              useful lives of the assets  (generally five to ten
                              years).  Amortization of leasehold improvements is
                              being  provided on the  straight-line  method over
                              the various lease terms or estimated useful lives,
                              if shorter.

 GOODWILL                     In  August  2001,  the  Company  elected to  adopt
                              SFAS No. 141, "Business Combinations" and No. 142,
                              "Goodwill  and  Intangible  Assets."  SFAS No. 141
                              requires  the  use  of  the  purchase   method  of
                              accounting   and   prohibits   the   use   of  the
                              pooling-of-interests   method  of  accounting  for
                              business  combinations  initiated  after  June 30,
                              2001.  SFAS No. 141 also requires that the Company
                              recognize  acquired  intangible  assets apart from
                              goodwill if the  acquired  intangible  assets meet
                              certain criteria. It also requires,  upon adoption
                              of SFAS No. 142, that the Company  reclassify,  if
                              necessary,  the  carrying  amounts  of  intangible
                              assets and goodwill  based on the criteria of SFAS
                              No. 141.

                              SFAS No. 142 requires,  among other  things,  that
                              companies no longer amortize goodwill, but instead
                              test goodwill for impairment at least annually. In
                              addition,  SFAS No. 142 requires  that the Company
                              identify   reporting  units  for  the  purpose  of
                              assessing    potential   future   impairments   of
                              goodwill,  reassess  the  useful  lives  of  other
                              existing  recognized  intangible  assets and cease
                              amortization   of   intangible   assets   with  an
                              indefinite   useful  life.  No   adjustments   for
                              impairment losses were required.


                                                                            F-10
<PAGE>
 GOODWILL  (CONTINUED)        The Company's previous business  combinations were
                              accounted for by using the purchase method and, as
                              of  August  2001,  the  net  carrying   amount  of
                              goodwill  from  prior  purchase  transactions  was
                              approximately $7.2 million. Annual amortization of
                              this amount, which ceased effective August 1, 2001
                              amounted to approximately $0.4 million in the year
                              ended July 31, 2001.

                              The effect of adoption of SFAS No. 142 on the 2001
                              and 2000  consolidated  results of operations were
                              as follows:

<TABLE>
<CAPTION>
                                                                                         2001             2000
                              ---------------------------------------------------------------------------------
                              <S>                                                <C>              <C>
                              Reported net income                                  $4,200,000       $4,091,000
                                Add back:  Amortization of goodwill                   417,000          367,000
                              ---------------------------------------------------------------------------------

                              Net income, as adjusted                              $4,617,000       $4,458,000
                              ---------------------------------------------------------------------------------

                              Basic earnings per share:
                                Reported net income                                      $.77             $.74
                                Amortization of goodwill                                  .08              .07
                              ---------------------------------------------------------------------------------

                              Basic earnings per share, as adjusted                      $.85             $.81
                              ---------------------------------------------------------------------------------

                              Diluted earnings per share:
                                Reported net income                                      $.75             $.74
                                Add back:  Amortization of goodwill                       .07              .07
                              ---------------------------------------------------------------------------------

                              Diluted earnings, per share, as adjusted                   $.82             $.81
                              =================================================================================
</TABLE>


 RECENT ACCOUNTING            SFAS  143 addresses  financial    reporting    and
 PRONOUNCEMENTS               reporting    for   obligations   associated   with
                              retirement of tangible  long-lived  assets and the
                              associated  retirement cost. SFAS 143 is effective
                              for the  fiscal  years  beginning  after  June 15,
                              2002.  The Company  will adopt SFAS 143  effective
                              August 1, 2002.

                              SFAS  144  addresses   financial   accounting  and
                              reporting  for  the   impairment  or  disposal  of
                              long-lived  assets.  SFAS 144 is effective for the
                              fiscal years  beginning  after  December 15, 2001.
                              The Company  will adopt SFAS  effective  August 1,
                              2002.

                              Currently,  the Company  does not believe that the
                              adoption  of SFAS 143 and  SFAS  144  will  have a
                              material  impact  on its  financial  position  and
                              results of operations.


                                                                            F-11
<PAGE>
 NET INCOME PER COMMON        Basic net income per share is computed by dividing
 SHARE                        income  available  to  common shareholders  by the
                              weighted-average    number   of   common    shares
                              outstanding.  Diluted  earnings per share reflect,
                              in periods  in which they have a dilutive  effect,
                              the impact of common shares issuable upon exercise
                              of stock options.


                              The  reconciliation  for the years  ended July 31,
                              2002, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                              Years ended July 31,                        2002          2001           2000
                              -----------------------------------------------------------------------------------
                              <S>                                         <C>           <C>            <C>
                              Average number of shares outstanding        5,516,689     5,444,035      5,538,426
                              -----------------------------------------------------------------------------------
                              Effect of dilutive securities -               275,222       171,379         13,130
                              Common stock options
                              -----------------------------------------------------------------------------------
                              Diluted Shares outstanding                  5,791,911     5,615,414      5,551,556
                              ===================================================================================
</TABLE>

 FAIR VALUE OF  FINANCIAL     The  carrying  amount reported in the consolidated
 INSTRUMENTS                  balance  sheets  for  cash,  accounts  receivable,
                              accounts payable and accrued expenses  approximate
                              fair value  because of the immediate or short-term
                              maturity of the financial instruments.


 ACCOUNTING FOR STOCK         The   Company   accounts  for employee stock-based
 OPTIONS                      compensation   in   accordance   with   Accounting
                              Principles  Board  Opinion  No.  25 ("APB  Opinion
                              25"),  "Accounting  for Stock Issued to Employees"
                              using intrinsic values with appropriate disclosure
                              in conformity  with the fair value based method of
                              Statement  of  Financial  Standard  No.  123 (SFAS
                              123).


 ESTIMATED  THIRD-PARTY       The amount  represents  overpayments from certain
 PAYOR SETTLEMENT             third-party  payors.  The Company anticipates that
                              the  third-party  payor will recoup these funds in
                              subsequent periods.


                                                                            F-12
<PAGE>
 USE OF ESTIMATES             The    preparation   of   financial  statements in
                              conformity  with  generally  accepted   accounting
                              principles  requires  management to make estimates
                              and assumptions  that affect the reported  amounts
                              of  assets  and  liabilities  at the  date  of the
                              financial  statements and the reported  amounts of
                              revenues and expenses during the reporting period.
                              Actual results could differ from those  estimates.
                              Such  estimates  relate  primarily to  third-party
                              payor  settlements  and  valuation   reserves  for
                              accounts receivable.


 WORKERS' COMPENSATION        The Company  self-insures up  to specified  limits
                              certain  risks  related to  workers'  compensation
                              liability.  The  estimated  costs of existing  and
                              expected future claims under the insurance program
                              are accrued based upon  historical loss trends and
                              may be subsequently  revised based on developments
                              relating to such claims.


 INCOME TAXES                 The Company  accounts  for  income taxes under an
                              asset and  liability  approach  that  requires the
                              recognition of deferred tax assets and liabilities
                              for the expected future tax consequences of events
                              that  have  been   recognized   in  the  Company's
                              financial statements or tax returns. The effect on
                              deferred tax assets and  liabilities of changes in
                              tax rates will be  recognized as income or expense
                              in the period that  includes the  enactment  date.
                              The Company files a  consolidated  Federal  income
                              tax return with its subsidiaries.


 LONG-LIVED ASSETS            Long-lived assets, such as property and equipment,
                              are  evaluated  for  impairment   when  events  or
                              changes  in   circumstances   indicate   that  the
                              carrying   amount  of  the   assets   may  not  be
                              recoverable through estimated  undiscounted future
                              cash flows from the use of these assets.  When any
                              such impairment exists, the related assets will be
                              written down to fair value.

                                                                            F-13
<PAGE>


 RECLASSIFICATIONS            Certain  reclassifications have been made in prior
                              years'   financial   statements   to   conform  to
                              classifications used in the current year.


















                                                                            F-14
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

1.  FURNITURE, EQUIPMENT      Furniture,  equipment  and  leasehold improvements
    AND LEASEHOLD             are stated at cost and are summarized as follows:
    IMPROVEMENTS
<TABLE>
<CAPTION>
                              July 31,                                                2002               2001
                              ---------------------------------------------------------------------------------
                              <S>                                              <C>                <C>
                              Furniture and equipment                           $1,924,000         $1,776,000
                              Leasehold improvements                               406,000            369,000
                              ---------------------------------------------------------------------------------
                                                                                 2,330,000          2,145,000
                              Less accumulated depreciation and
                                amortization                                     1,473,000          1,206,000
                              ---------------------------------------------------------------------------------
                                                                                $  857,000         $  939,000
                              =================================================================================
</TABLE>


2.  GOODWILL                  Changes in net goodwill are as follows:

<TABLE>
<CAPTION>
                              July 31,                                                2002               2001
                              ---------------------------------------------------------------------------------
                              <S>                                               <C>                <C>
                              Balance, beginning of year                        $7,166,000         $6,861,000
                              Additions                                            200,000            722,000
                              Amortization for year                                      -           (417,000)
                              ---------------------------------------------------------------------------------
                              Balance, end of year                              $7,366,000         $7,166,000
                              =================================================================================
</TABLE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================


3.  OTHER INTANGIBLE          Other intangible assets are as follows:
    ASSETS
<TABLE>
<CAPTION>
                              July 31,                                              2002                 2001
                              ---------------------------------------------------------------------------------
                              GROSS CARRYING AMOUNT:
                              <S>                                             <C>                  <C>
                                 Covenants not to compete                     $1,325,000           $1,275,000
                                 Personnel files                               1,562,000            1,519,000
                                 Patient files                                 1,234,000            1,192,000
                              ---------------------------------------------------------------------------------
                                                                               4,121,000            3,986,000
                              ---------------------------------------------------------------------------------
                              ACCUMULATED AMORTIZATION:
                                 Covenants not to compete                     (1,049,000)           (893,000)
                                 Personnel files                              (1,137,000)           (930,000)
                                 Patient files                                  (529,000)           (346,000)
                              ---------------------------------------------------------------------------------
                                                                              (2,715,000)         (2,169,000)
                              ---------------------------------------------------------------------------------
                              Balance, end of year                            $1,406,000           $1,817,000
                              =================================================================================
</TABLE>

                                                                            F-15
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

3.  OTHER INTANGIBLE          The aggregate  amortization  expense for the years
    ASSETS (CONTINUED)        ended July 31, 2002,  2001 and  2000 was $546,000,
                              $956,000 and $660,000, respectively.

                              Estimated   amortization  expense  is  as follows:

                              Years ended July 31,
                              -------------------------------------------------
                              2003                                $   470,000
                              2004                                    377,000
                              2005                                    355,000
                              2006                                    109,000
                              2007                                     57,000
                              -------------------------------------------------
                                                                   $1,368,000
                              -------------------------------------------------


                              The remaining weighted-average amortization period
                              is as follows:

                              Year ended July 31,                   2002
                              -------------------------------------------
                              Covenants not to compete              3.28 YEARS
                              Personnel files                       2.42 YEARS
                              Patient files                         3.82 YEARS
                              -------------------------------------------
                                                                    3.16 YEARS
                              -------------------------------------------


                              Other intangible  assets are being amortized using
                              the straight-line method over a period of three to
                              ten years.

4.  ACCOUNTS PAYABLE AND      Accounts  payable  and  accrued  expenses  are  as
    ACCRUED EXPENSES          follows:
<TABLE>
<CAPTION>
                              July 31,                                              2002              2001
                              ---------------------------------------------------------------------------------
                              <S>                                            <C>                 <C>
                              Trade accounts payable                         $   730,000         $   857,000
                              Accrued employee compensation and
                                benefits                                       2,461,000           2,070,000
                              Other                                              390,000             341,000
                              ---------------------------------------------------------------------------------
                                                                              $3,581,000          $3,268,000
                              =================================================================================
</TABLE>

                                                                            F-16
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================


5.  INVESTMENT IN             During  fiscal 1996,  following an initial  public
    SUNSTAR                   offering  and change in  management,  the  Company
    HEALTHCARE,  INC.         equity   method  of   accounting.   held  a  37.6%
                              investment    in    SunStar    Healthcare,    Inc.
                              ("SunStar"), which was accounted for under the

                              During the fiscal  year ended July 31,  2000,  the
                              Company  sold   259,510   shares  of  SunStar  for
                              $1,602,000, resulting in a gain of $1,602,000.

                              In  February   2000,   SunStar's   sole  operating
                              subsidiary effectively discontinued operations. At
                              July 31, 2002, the Company's ownership  percentage
                              of SunStar  was 21.6% and the  Company's  value of
                              its  investment in SunStar was $0. The Company and
                              certain of its  officers and  directors  have been
                              named  in a class  action  brought  on  behalf  of
                              certain shareholders of SunStar (See Note 10d)).

6.  ACQUISITIONS              Asset acquisitions

                              On November 1, 1999, the Company  acquired certain
                              assets of Optimum  Care  Services  of  Connecticut
                              Inc., Optimum Home Health of Connecticut, Inc. and
                              Optimum Home Care of Connecticut,  Inc. The assets
                              were  acquired  from a  court-appointed  Chapter 7
                              Trustee  for a  purchase  price of  $4,490,000  in
                              cash, including  acquisition costs of $90,000. The
                              final  purchase  price was  determined  through an
                              auction  process  conducted  at the United  States
                              Bankruptcy    Court    for   the    District    of
                              Massachusetts.   The  assets   acquired   included
                              certain,   but  not  all,  machinery,   equipment,
                              intangibles   and  accounts   receivable  and  was
                              allocated  as  follows:   $2,307,000  to  accounts
                              receivable,  $205,000 to furniture  and  equipment
                              and $1,978,000 to goodwill.

                              On April 14, 2000,  the Company  acquired  certain
                              assets of the Connecticut  operations of U.S. Home
                              Care  Corp.   for  $311,000  in  cash,   including
                              acquisition costs of $11,000. The assets purchased
                              consisted   of  patient   files  of  $156,000  and
                              employee files of $155,000.

                                                                            F-17
<PAGE>
                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

6.  ACQUISITIONS              On  August  25, 2000, the Company acquired certain
    (CONTINUED)               assets  of  Health  Force  Owned,   Ltd.  and  its
                              affiliates  for  $1,822,000  in  cash,   including
                              acquisition costs of $42,000. The assets purchased
                              consisted of patients files of $400,000,  employee
                              files of  $400,000,  covenant  not to  compete  of
                              $300,000 and goodwill of $722,000.

                              The above  acquisitions  have been recorded using,
                              the purchase  method of  accounting.  Accordingly,
                              the results of these operations have been included
                              in   the   accompanying   consolidated   financial
                              statements since the dates of acquisition.

                              The effects of the above  acquisitions on the 2001
                              and 2000  consolidated  results of operations were
                              not significant.






                                                                            F-18
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================


                              The  provision  for income taxes is  summarized as
                              follows:

    Years ended July 31,               2002            2001               2000
    ----------------------------------------------------------------------------
    Current:
       Federal                    $2,500,000     $2,275,000        $1,504,000
       State                         836,000        735,000           641,000
    ----------------------------------------------------------------------------
                                   3,336,000      3,010,000         2,145,000
    Deferred                               -       (306,000)          (87,000)
    ----------------------------------------------------------------------------
                                  $3,336,000     $2,704,000        $2,058,000
    ===========================================================================-

      The deferred tax asset consists of the following:

    July 31,                                      2002           2001
    ------------------------------------------------------------------
    Current:
        Accrued liabilities and reserves      $295,000       $510,000
        State net operating
         loss         carryforwards                  -         12,000
    ------------------------------------------------------------------
                                               295,000        522,000
    Long term:
        Amortization of intangible
        assets                                 515,000        288,000
    ------------------------------------------------------------------
                                              $810,000       $810,000
    ==================================================================

      The  reconciliation of the statutory tax rate to the effective tax rate is
as follows:

    Years ended July 31,                   2002          2001          2000
    ----------------------------------------------------------------------------
    Statutory rate                        34%           34%          34%
    State and local taxes
       (net of federal tax effect)         6             6           10
    Federal tax credit                    (1)           (2)          (2)
    Permanent differences                  -             1            1
    Change in valuation allowance          -             -           (5)
    Adjustments to prior years tax
      liabilities                          -             -           (2)
    Other                                  -             -           (3)
    ----------------------------------------------------------------------------
    Effective rate                        39%           39%          33%
    ============================================================================

                                                                            F-19
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================


8.  CONCENTRATIONS OF         The Company's  business is with  customers who are
    CREDIT RISK AND           in the  healthcare  industry or with  governmental
    MAJOR   CUSTOMERS         agencies.

                              The  Company   provides   temporary   health  care
                              personnel to in-home  patients and  facilities  in
                              the New York City metropolitan  area, the State of
                              Connecticut  and the State of New  Jersey.  Credit
                              losses  relating to  customers  historically  have
                              been minimal and within management's expectations.

                              At  July  31,   2002,   the   Company   maintained
                              approximately 32% of its cash and cash equivalents
                              with one financial institution.

                              Under  certain   federal  and  state   third-party
                              reimbursement  programs,  the Company received net
                              patient  revenues  of  approximately  $41,253,000,
                              $37,788,000  and  $19,955,000  for the years ended
                              July 31, 2002,  2001 and 2000,  respectively.  The
                              Company  also  received  net  patient  revenues of
                              approximately    $4,547,000,     $4,610,000    and
                              $5,663,000 for the years ended July 31, 2002, 2001
                              and 2000, respectively, from a private company. At
                              July  31,  2002  and  2001,  the  Company  had  an
                              aggregate outstanding  receivable from federal and
                              state agencies of $4,621,000 and $5,058,000 and an
                              outstanding    receivable   of   $1,150,000    and
                              $1,142,000,     from    the    private    company,
                              respectively.


                                                                            F-20
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================


9.  OPTIONS                   In 1992,  the Company  adopted an  Employee  Stock
                              Option  Plan  (the  "Plan")  designed  to  provide
                              incentives to key employees  (including  directors
                              and  officers  who  are  key   employees)  and  to
                              non-employee  directors of the  Company.  The Plan
                              authorizes  the  granting  of both  incentive  and
                              non-qualified  stock  options  to  purchase  up to
                              500,000 shares of the Company's  common stock.  As
                              of July 31, 2002,  318,139 shares of the Company's
                              common   stock  have  been   reserved  for  future
                              issuance  upon the exercise of options  designated
                              at  either  (i)  options  intended  to  constitute
                              incentive   stock  options   ("ISOs")   under  the
                              Internal Revenue Code of 1986, as amended, or (ii)
                              nonqualified  options. The Plan expired on July of
                              2002.  Options  granted  under the Plan expire not
                              more  than ten  years  from the date of grant  and
                              vest immediately.

                              In 1999,  the  Company  adopted a second  Employee
                              Stock  Plan (the "1999  Plan").  The 1999 Plan was
                              adopted in anticipation of expiration of the Plan.
                              The  1999  Plan  was  also   designed  to  provide
                              incentives to key employees  (including  directors
                              and  officers  who  are  key   employees)  and  to
                              non-employee  directors of the  Company.  The Plan
                              authorizes  the  granting  of both  incentive  and
                              non-qualified  stock  options  to  purchase  up to
                              551,250 shares of the Company's  common stock.  As
                              of July 31, 2002,  530,880 shares of the Company's
                              common   stock  have  been   reserved  for  future
                              issuance.  The  provisions  of the  1999  Plan are
                              consistent   with   the   Plan.    Unless   sooner
                              terminated,  the 1999 Plan will  expire in October
                              2009.  Options  granted under the 1999 Plan expire
                              not more than ten years from the date of grant and
                              vest immediately.

                              All stock  options  have been granted to employees
                              and  non-employees  at exercise prices equal to or
                              in excess of the  market  value on the date of the
                              grant.

                                                                            F-21
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================


9.  OPTIONS                   The Company  applies  APB Opinion 25,  "Accounting
    (CONTINUED)               for  Stock  Issued  to  Employees,"   and  related
                              Interpretations in accounting for its stock option
                              plan by  recording  as  compensation  expense  the
                              excess of the fair market  value over the exercise
                              price per  share as of the date of grant.  Because
                              the exercise price of the Company's employee stock
                              options  equals the market price of the underlying
                              stock on the date of grant,  no  compensation  was
                              recognized.

                              SFAS No. 123  requires  the Company to provide pro
                              forma  information  regarding  net  income and net
                              income per share as if  compensation  cost for the
                              Company's stock option plan had been determined in
                              accordance   with  the  fair  value  based  method
                              prescribed in SFAS No. 123. The Company  estimates
                              the fair value of each  stock  option at the grant
                              date by  using  the  Black-Scholes  option-pricing
                              model   with  the   following   weighted   average
                              assumptions used for grants since 1992:

                              Years ended July 31,        2002    2001     2000
                              -------------------------------------------------
                              ASSUMPTIONS
                                 Dividend Yield            0.00%    -      0.00%
                                 Volatility               66.00%    -     35.00%
                                 Risk free interest
                                   rate                    5.04%    -      6.20%
                                 Expected lives         10 YEARS    -   10 years
                              ==================================================





                                                                            F-22
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================


9.  OPTIONS                   Under the accounting  provisions of FASB Statement
    (CONTINUED)               123, the  Company's  net income and net income per
                              share  would have been  adjusted  to the pro forma
                              amounts indicated below:

<TABLE>
<CAPTION>
                              Years ended July 31,                        2002           2001           2000
                              --------------------------------------------------------------------------------
                              <S>                                     <C>            <C>            <C>
                              PRO FORMA RESULTS Net income:
                                    As reported                       $5,271,000     $4,200,000     $4,091,000
                                    Pro forma                          5,050,000            (a)      3,843,000
                                 Income per common share-basic:
                                      As reported                           0.96           0.77           0.74
                                      Pro forma                             0.92            (a)           0.69
                                 Income per common share-diluted:
                                      As reported                           0.91           0.75           0.74
                                      Pro forma                             0.87            (a)           0.69
                              =================================================================================
</TABLE>

(a) No pro forma since options were not granted.


                                                                            F-23
<PAGE>

                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

9.  OPTIONS                   A summary  of the  status of the  Company's  stock
    (CONTINUED)               option plan as of July 31, 2002, 2001 and 2000 and
                              changes  for the years  ending  on those  dates is
                              presented below:

<TABLE>
<CAPTION>
                                                                                                     Weighted
                                                                                                     average
                                                                       Number of     Expiration      exercise
                                                                         shares         date          price
                              ----------------------------------------------------------------------------------
                              <S>                                        <C>         <C>                   <C>
                              Options outstanding at July 31, 1999         286,161    2007-2009         $  3.78
                              Options granted                              271,215    2007-2009            3.94
                              Options forfeited                           (32,085)        -                3.89
                              ----------------------------------------------------------------------------------
                              Options outstanding at July 31, 2000         525,291    2007-2009            3.86
                              Options exercised                           (17,325)        -                3.96
                              ----------------------------------------------------------------------------------
                              Options outstanding at July 31, 2001         507,966    2007-2009            3.85
                              Options exercised                          (153,445)        -                3.61
                              Options forfeited                            (5,513)        -                3.65
                              Options granted                              183,750    2007-2011           13.31
                              ----------------------------------------------------------------------------------
                              Options outstanding at July 31, 2002         532,758        -              $13.97
                              ==================================================================================
</TABLE>

                              The  Plan  options  are   exercisable  at  various
                              prices,  none of which  were in  excess of 110% of
                              the  fair  market  value of the  Company's  common
                              stock at the date of grant.

                              Data summarizing  year-end options exercisable and
                              weighted  average  fair value of  options  granted
                              during  the years  ended July 31,  2002,  2001 and
                              2000 is shown below:

<TABLE>
<CAPTION>
                              Options Exercisable                         2002           2001           2000
                              ----------------------------------------------------------------------------------
                              <S>                                      <C>           <C>              <C>
                              Options exercisable at year end              532,758     507,966          525,291
                              Weighted average exercise price           $    13.97   $    3.85        $    3.86
                              Weighted average fair value of
                                options granted during the year               9.61           -             4.09
                              Weighted average remaining
                                contractual life                        7.07 YEARS  6.98 years       7.98 years
                              ==================================================================================
</TABLE>

                                                                            F-24
<PAGE>
                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================


10. COMMITMENTS,              a) Effective  January 1, 1999, the Company amended
    CONTINGENCIES AND         and  restated  its  Employee   Savings  and  Stock
    OTHER MATTERS             Investment  Plan organized under Section 401(k) of
                              the Internal Revenue Code. Under the amended plan,
                              employees  may  contribute  up  to  15%  of  their
                              salary,  limited to the maximum  amount  allowable
                              under  federal tax  regulations.  The Company will
                              match   100%  of  the   first  3%  of   employees'
                              contributions and 50% of the next 2% of employees'
                              contributions,    provided   that   the   matching
                              contributions  on behalf of any employee  does not
                              exceed 4% of employees' compensation.  The Company
                              may  also  make  additional  contributions  at its
                              discretion.  An  employee  may  invest in  Company
                              stock and  several  mutual  funds.  The  Company's
                              matching  contributions  for the years  ended July
                              31, 2002,  2001 and 2000 were $617,000,  $495,000,
                              and  $226,000,  respectively.

                              b) The Company has employment agreements with five
                              officers,  which expire through  October 31, 2006.
                              The  aggregate   commitment   for  future  salary,
                              excluding  bonuses,  is $4,507,500.  One agreement
                              also provides for increases  based on increases in
                              the  consumer  price index and  additional  annual
                              compensation  based on 4% of  pre-tax  income,  as
                              defined,  in  excess  of  $3,000,000.   Two  other
                              agreements  provide  for  additional  compensation
                              based on 4% and 1% of income from  operations,  as
                              defined, in excess of $3,300,000.

                              c) The Company  rents  various  office  facilities
                              through  2006  under  the terms of  several  lease
                              agreements that include escalation clauses.


                                                                            F-25
<PAGE>
                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

10. COMMITMENTS,              d) Effective  January 1, 1999, the Company amended
    CONTINGENCIES AND         and  restated  its  Employee   Savings  and  Stock
    OTHER MATTERS             Investment  Plan organized under Section 401(k) of
    (CONTINUED)               the Internal Revenue Code. Under the amended plan,
                              employees  may  contribute  up  to  15%  of  their
                              salary,  limited to the maximum  amount  allowable
                              under  federal tax  regulations.  The Company will
                              match   100%  of  the   first  3%  of   employees'
                              contributions and 50% of the next 2% of employees'
                              contributions,    provided   that   the   matching
                              contributions  on behalf of any employee  does not
                              exceed 4% of employees' compensation.  The Company
                              may  also  make  additional  contributions  at its
                              discretion.  An  employee  may  invest in  Company
                              stock and  several  mutual  funds.  The  Company's
                              matching  contributions  for the years  ended July
                              31, 2002,  2001 and 2000 were $617,000,  $495,000,
                              and $226,000, respectively.

                              e) The Company has employment agreements with five
                              officers,  which expire through  October 31, 2006.
                              The  aggregate   commitment   for  future  salary,
                              excluding  bonuses,  is $4,507,500.  One agreement
                              also provides for increases  based on increases in
                              the  consumer  price index and  additional  annual
                              compensation  based on 4% of  pre-tax  income,  as
                              defined,  in  excess  of  $3,000,000.   Two  other
                              agreements  provide  for  additional  compensation
                              based on 4% and 1% of income from  operations,  as
                              defined,  in excess of $3,300,000.

                              f) The Company  rents  various  office  facilities
                              through  2006  under  the terms of  several  lease
                              agreements that include escalation clauses.



                                                                            F-26
<PAGE>
                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

10. COMMITMENTS,              At  July   31,   2002,   minimum   annual   rental
    CONTINGENCIES AND         commitments under non-cancellable operating leases
    OTHER MATTERS             are as follows: Years ended July 31,
    (CONTINUED)

                              --------------------------------------------------
                              2003                                   $   864,000
                              2004                                       444,000
                              2005                                       356,000
                              2006                                        15,000
                              --------------------------------------------------
                                                                      $1,679,000
                              ==================================================

                              Rent  expense for the years  ended July 31,  2002,
                              2001   and  2000   was   approximately   $853,000,
                              $858,000, and $636,000, respectively.

                              One lease  agreement is with a company  controlled
                              by the Company's  Chairman of the Board.  Net rent
                              expense  under such lease  agreement  approximates
                              $202,000 per year.

                              g) The  Company and  certain of its  officers  and
                              directors  have  been  named  as  defendants  in a
                              consolidated  class  action  brought  on behalf of
                              certain  shareholders of SunStar Healthcare,  Inc.
                              ("SunStar").  The lawsuit  asserts alleged acts or
                              omissions, which resulted in misrepresentations or
                              omissions of material  information  concerning the
                              financial  condition of SunStar. In February 2001,
                              the Court  dismissed the complaint and granted the
                              plaintiffs  leave  to  amend.  In  addition,   the
                              lawsuit  alleges  that  the  Company  and  certain
                              directors   exercised  control  over  SunStar.  In
                              October 2001,  the Court  granted the  defendants'
                              motion to dismiss the  complaint  with  prejudice.
                              Plaintiff's did not appeal this decision.

                                                                            F-27
<PAGE>
                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

10. COMMITMENTS,              In a related action,  the director  defendants are
    CONTINGENCIES AND         named  in a  case  brought  by the  Department  of
    OTHER MATTERS             Insurance of the State of Florida. The allegations
    (CONTINUED)               in this action are similar to those alleged in the
                              class  action  lawsuit,   which  was  subsequently
                              dismissed.  Although  the  Company is not named in
                              this action,  the Company intends to indemnify the
                              director   defendants   to  the   fullest   extent
                              permitted  under its by-laws.  On May 7, 2001, the
                              Court granted the director  defendants'  motion to
                              dismiss and granted the plaintiff leave to serve a
                              further amended  complaint.  On July 24, 2001, the
                              plaintiff   served  an   amended   complaint.   On
                              September 24, 2001 the director defendants filed a
                              motion  to  dismiss  the  amended  complaint.  The
                              defendants'   believe  that  the   complaints  are
                              without  merit  and  intend to  vigorously  defend
                              them. At this time, any possible  liability to the
                              Company cannot be determined.

                              h)  The   Company  has  a   $7,500,000   committed
                              revolving  line of credit  facility  (the  "credit
                              facility")  with its  bank.  The  credit  facility
                              provides  for  the  Company  to  borrow  up to the
                              lesser of $7,500,000  or 80% of eligible  accounts
                              receivable  at the bank's prime rate or LIBOR plus
                              2.5%. The credit  facility  expires on October 23,
                              2003 and  requires  the  Company  to meet  certain
                              financial  covenants  and  ratios.  The Company is
                              required  to pay a .25%  commitment  fee on unused
                              amounts. At July 31, 2002 there was no outstanding
                              balance under the credit facility.


11. STOCK DIVIDENDS           The  Board   announced   on  April  25,  2002  the
                              declaration of a 5% stock dividend payable May 17,
                              2002 to  shareholders  of record on May 10,  2002.
                              The Board  also  announced  on March 13,  2001 the
                              declaration  of a 5%  stock  dividend  payable  on
                              March 23, 2001 to  shareholders of record on March
                              16, 2001. The basic and diluted  weighted  average
                              number of shares  outstanding  and net  income per
                              share  information for all prior reporting periods
                              have been  restated  to reflect the effects of the
                              stock dividends.

                                                                            F-28
<PAGE>
                                                 NATIONAL HOME HEALTH CARE CORP.
                                                                AND SUBSIDIARIES


                                                   NOTES TO FINANCIAL STATEMENTS

================================================================================

12. SUMMARIZED QUARTERLY      Presented  below  is a  summary  of the  unaudited
    DATA (UNAUDITED)          consolidated  quarterly financial  information for
                              the  years  ended  July  31,  2002  and  2001  (in
                              thousands, except per share data):

<TABLE>
<CAPTION>
                                                                                    2002
                              ---------------------------------------------------------------------------------
                               Quarter                            First       Second      Third      Fourth
                              ---------------------------------------------------------------------------------
                               <S>                                  <C>         <C>        <C>        <C>
                               Net patient revenue                   $20,274     $20,466    $20,620    $20,812
                              ---------------------------------------------------------------------------------
                               Cost of Revenue                        12,926      12,972     13,081     13,305
                               General and administrative
                                expenses                               4,824       5,012      5,186      5,645
                               Amortization of intangibles               137         136        136        137
                               Provision for possible losses             115          65         65         50
                              ---------------------------------------------------------------------------------
                                       Total operating expenses       18,002      18,185     18,468     19,137
                              ---------------------------------------------------------------------------------
                               Income from operations                  2,272       2,281      2,152      1,675
                               Interest income                            78          44         48         57
                              ---------------------------------------------------------------------------------
                               Income before income taxes              2,350       2,325      2,200      1,732
                               Provision for income taxes                936         904        839        657
                              ---------------------------------------------------------------------------------
                               Net income                              1,414       1,421      1,361      1,075
                              ---------------------------------------------------------------------------------
                               Net income per common share:
                                 Basic                                   .26         .26        .25        .19
                                 Diluted                                 .25         .24        .24        .18
                              =================================================================================

                                                                                       2001
                              -------------------------------------------------------------------------------
                               Quarter                           First       Second     Third      Fourth
                              ---------------------------------------------------------------------------------
                               Net patient revenue                  $17,518    $18,479    $18,944     $19,551
                              ---------------------------------------------------------------------------------
                               Cost of Revenue                       11,642     11,964     12,302      12,642
                               General and administrative
                                expenses                              4,040      4,458      4,477       4,653
                               Amortization of intangibles              222        245        244         245
                               Provision for possible losses            130        180        180         180
                              ---------------------------------------------------------------------------------
                                       Total operating expenses      16,034     16,847     17,203      17,720
                              ---------------------------------------------------------------------------------
                               Income from operations                 1,484      1,632      1,741       1,831
                               Interest income                           37         41         59          79
                              ---------------------------------------------------------------------------------
                               Income before income taxes             1,521      1,673      1,800       1,910
                               Provision for income taxes               649        714        735         606
                              ---------------------------------------------------------------------------------
                               Net income                               872        959      1,065       1,304
                              ---------------------------------------------------------------------------------
                               Net income per common share:
                                 Basic                                  .16        .18        .20         .23
                                 Diluted                                .15        .17        .19         .24
                              =================================================================================

</TABLE>

13. SUBSEQUENT EVENT          On  September  3,  2002,  the  Company,  through a
                              newly-formed  subsidiary in Massachusetts acquired
                              certain  assets of  Medical  Resources,  Inc.  and
                              related entities  ("Medical  Resources").  Medical
                              Resources   provides  home  health  care  services
                              throughout   Massachusetts.    The   purchase   of
                              $2,623,000, including acquisition costs of $73,000
                              was financed using internal funds. The acquisition
                              was accounted for as a purchase.

                                                                            F-29

<PAGE>











                             SUPPLEMENTAL MATERIAL













                                                                            F-30
<PAGE>




REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
   ON SUPPLEMENTAL MATERIAL


The audits  referred  to in our report  dated  October 2, 2002  relating  to the
consolidated  financial  statements  of  National  Home  Health  Care Corp.  and
Subsidiaries, which is contained in Item 8 of this Form 10-K, included the audit
of the financial  statement schedule listed in the accompanying  Schedule II for
the years ended July 31, 2002 and 2001. This financial statement schedule is the
responsibility of the Company's management.  Our responsibility is to express an
opinion on this financial statement schedule based upon our audits.

In our  opinion  such  financial  statement  schedule  presents  fairly,  in all
material respects, the information set forth therein.



/s/ BDO Seidman, LLP
---------------------
BDO Seidman, LLP
Valhalla, New York
October 2, 2002


                                                                            F-31
<PAGE>




                    INDEPENDENT AUDITORS' REPORT ON SCHEDULE
                    ----------------------------------------


     The audit referred to in our report dated October 3, 2000 on the
consolidated financial statements of National Home Health Care Corp. and
Subsidiaries, which appears in Part II, also included Schedule II for the year
ended July 31, 2000. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audit. In
our opinion, the financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein, in compliance with
the applicable accounting regulations of the Securities and Exchange Commission.



/s/ Holtz Rubenstein & CO., LLP
-------------------------------
Holtz Rubenstein & CO., LLP
Melville, New York
October 3, 2000


                                                                            F-32
<PAGE>



<TABLE>
<CAPTION>
                    Column A                      Column B                         Column C
--------------------------------------------------------------------------------------------------------------
                                                                                   Additions
                                                                ---------------------------------------------
                 Description               Balance, beginning of  Charged to costs and     Charged to other
                                                   period               expenses          accounts describe
--------------------------------------------------------------------------------------------------------------
<S>                                              <C>                   <C>              <C>
Year ended July 31, 2002:
 Allowance deducted from asset account
 Allowance for possible losses                   $865,000              $295,000         $            -
--------------------------------------------------------------------------------------------------------------
Year ended July 31, 2001:
 Allowance deducted from asset account
 Allowance for possible losses                   $673,000              $670,000         $            -
--------------------------------------------------------------------------------------------------------------
Year ended July 31, 2000:
 Allowance deducted from asset account
 Allowance for possible losses                   $392,000              $595,000         $            -
--------------------------------------------------------------------------------------------------------------


                                                  Column D                Column E
--------------------------------------------------------------------------------------------
                 Description                 Deductions describe    Balance, end of period
--------------------------------------------------------------------------------------------
Year ended July 31, 2002:
 Allowance deducted from asset account
 Allowance for possible losses                        $469,000(a)                $691,000
--------------------------------------------------------------------------------------------
Year ended July 31, 2001:
 Allowance deducted from asset account
 Allowance for possible losses                        $478,000(a)                $865,000
--------------------------------------------------------------------------------------------
Year ended July 31, 2000:
 Allowance deducted from asset account
 Allowance for possible losses                        $314,000(a)                $673,000
--------------------------------------------------------------------------------------------

</TABLE>

                                 See accompanying independent accountants'report
                                                       on supplemental material.


(a) Represents actual write-offs.









                                                                            F-33
<PAGE>


(3)  Exhibits

EXHIBIT                                 DOCUMENT
NUMBER                                  --------
------

3.1            Certificate of  Incorporation.  Incorporated  by reference to the
               Registrant's  Registration  Statement  on Form S-1 (No.  2-86643)
               filed September 20, 1983 (the "1983 Form S-1").

3.2            Certificate  of  Amendment  to   Certificate  of   Incorporation.
               Incorporated  by reference to the  Registrant's  Annual Report on
               Form 10-K for the fiscal year ended July 31, 1992.

3.3            By-laws. Incorporated by reference to the 1983 Form S-1.

10.1           1992  Stock  Option  Plan.   Incorporated  by  reference  to  the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               July 31, 1993 (the "1993 Form 10-K").

10.2           Incentive  Stock  Option Plan.  Incorporated  by reference to the
               1993 Form 10-K.

10.3           1999  Stock  Option  Plan.   Incorporated  by  reference  to  the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               July 31, 2000.

10.4           Third  Amendment,  dated as of August 1,  2001,  to  Amended  and
               Restated   Employment   Agreement   between  the  Registrant  and
               Frederick   H.   Fialkow.   Incorporated   by  reference  to  the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               July 31, 2001 (the "2001 Form 10-K").

10.5           Amended and Restated Employment Agreement dated as of November 1,
               2001  between  the   Registrant   and   Frederick   H.   Fialkow.
               Incorporated by reference to the Registrant's Quarterly Report on
               Form 10-Q for the fiscal  quarter  ended  January  31,  2002 (the
               "January 31, 2002 Form 10-Q").

10.6           Fourth  Amendment,  dated as of August  1,  2001,  to  Employment
               Agreement between the Registrant and Steven Fialkow. Incorporated
               by reference to the 2001 Form 10-K.

10.7           Employment  Agreement  dated as of November  1, 2001  between the
               Registrant and Steven  Fialkow.  Incorporated by reference to the
               January 31, 2002 Form 10-Q.

10.8           Employment  Agreement  dated as of November  1, 2001  between the
               Registrant and Robert P. Heller. Incorporated by reference to the
               January 31, 2002 Form 10-Q.

10.9           Employment  Agreement  dated as of November  1, 2001  between the
               Registrant and Richard Garofalo. Incorporated by reference to the
               January 31, 2002 Form 10-Q.


                                      -31-
<PAGE>

EXHIBIT                                 DOCUMENT
NUMBER                                  --------
------


10.10          Amended and Restated Asset Purchase  Agreement  dated October 15,
               1999 among Charles L. Glerum as Trustee for Optimum Care Services
               of Connecticut,  Inc., Optimum Home Health of Connecticut,  Inc.,
               Optimum Home Care of  Connecticut,  Inc.,  New England Home Care,
               Inc.,  Connecticut  Staffing  Works  Corp.  and  the  Registrant.
               Incorporated by reference to the  Registrant's  Current Report on
               Form 8-K dated November 11, 1999.

10.11          The Registrant's Employee Savings and Stock Investment Plan under
               Section  401(k) of the  Internal  Revenue  Code,  effective as of
               January 1, 1999.  Incorporated  by reference to the  Registrant's
               Quarterly  Report  on Form  10-Q  for the  fiscal  quarter  ended
               October 31, 1999.

10.12          Letter  Agreement  dated  February  20, 2000  providing a Secured
               Advised Line of Credit from the Bank of New York to National Home
               Health Care Corp.  Incorporated by reference to the  Registrant's
               Quarterly  Report  on Form  10-Q  for the  fiscal  quarter  ended
               January 31, 2000 (the "January 31, 2000 Form 10-Q").

10.13          Letter  Agreement  dated  February  20, 2000  providing a Secured
               Advised  Line of Credit  from the Bank of New York to New England
               Home Care, Inc. Incorporated by reference to the January 31, 2000
               Form 10-Q.

21.1*          List of Subsidiaries.

23.1*          Consent of Holtz Rubenstein & Co., LLP.

23.2*          Consent of BDO Seidman, LLP.

99.1*          Certification  of  Principal  Executive  Officer  pursuant  to 18
               U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

99.2*          Certification  of  Principal  Financial  Officer  pursuant  to 18
               U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.


----------
*     Filed herewith

        (b)  Reports on Form 8-K.
             -------------------

        None.



                                      -32-
<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                           NATIONAL HOME HEALTH CARE CORP.

                                           /s/ Robert P. Heller
                                           -------------------------------------
                                           By:   Robert P. Heller
                                                 Vice President of Finance
                                                 and Chief Financial Officer

Dated:  October 29, 2002

     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended,  this report has been signed on the above date by the following persons
on behalf of the Registrant and in the capacities indicated.


/s/ Frederick H. Fialkow                 Chairman of the Board of Directors
--------------------------------
Frederick H. Fialkow


/s/ Steven Fialkow                       President, Chief Executive Officer,
--------------------------------         Secretary and Director (principal
Steven Fialkow                           executive officer)


/s/ Robert P. Heller                     Vice President of Finance and Chief
--------------------------------         Financial Officer (principal financial
Robert P. Heller                         and accounting officer)


/s/ Ira Greifer                          Director
--------------------------------
Ira Greifer, M.D.


/s/ Bernard Levine                       Director
--------------------------------
Bernard Levine, M.D.


/s/ Robert Pordy                         Director
--------------------------------
Robert Pordy, M.D.


<PAGE>


                  CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER

     I, Steven Fialkow, certify that:

     1.   I have reviewed this annual report on Form 10-K of National Home
          Health Care Corp.;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report; and

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.

     [Items 4, 5 and 6 omitted pursuant to the transition provisions of the 1934
Securities Exchange Act Release No. 34-46427.]


Date:  October 29, 2002

                                          /s/ Steven Fialkow
                                          --------------------------------------
                                          Steven Fialkow
                                          President and Chief Executive Officer



                                       (i)
<PAGE>




                  CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER

     I, Robert P. Heller, certify that:

     1.   I have reviewed this annual report on Form 10-K of National Home
          Health Care Corp.;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report; and

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.

     [Items 4, 5 and 6 omitted pursuant to the transition provisions of the 1934
Securities Exchange Act Release No. 34-46427.]


Date:  October 29, 2002

                                          /s/ Robert P. Heller
                                          --------------------------------------
                                          Robert P. Heller
                                          Vice President of Finance and Chief
                                          Financial Officer


                                      (ii)

<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    EXHIBITS

                                       to

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, FOR THE
                         FISCAL YEAR ENDED JULY 31, 2002


                         NATIONAL HOME HEALTH CARE CORP.



<PAGE>



EXHIBIT                                 DOCUMENT
NUMBER                                  --------
------

3.1            Certificate of  Incorporation.  Incorporated  by reference to the
               Registrant's  Registration  Statement  on Form S-1 (No.  2-86643)
               filed September 20, 1983 (the "1983 Form S-1").

3.2            Certificate  of  Amendment  to   Certificate  of   Incorporation.
               Incorporated  by reference to the  Registrant's  Annual Report on
               Form 10-K for the fiscal year ended July 31, 1992.

3.3            By-laws. Incorporated by reference to the 1983 Form S-1.

10.1           1992  Stock  Option  Plan.   Incorporated  by  reference  to  the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               July 31, 1993 (the "1993 Form 10-K").

10.2           Incentive  Stock  Option Plan.  Incorporated  by reference to the
               1993 Form 10-K.

10.3           1999  Stock  Option  Plan.   Incorporated  by  reference  to  the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               July 31, 2000.

10.4           Third  Amendment,  dated as of August 1,  2001,  to  Amended  and
               Restated   Employment   Agreement   between  the  Registrant  and
               Frederick   H.   Fialkow.   Incorporated   by  reference  to  the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               July 31, 2001 (the "2001 Form 10-K").

10.5           Amended and Restated Employment Agreement dated as of November 1,
               2001  between  the   Registrant   and   Frederick   H.   Fialkow.
               Incorporated by reference to the Registrant's Quarterly Report on
               Form 10-Q for the fiscal  quarter  ended  January  31,  2002 (the
               "January 31, 2002 Form 10-Q").

10.6           Fourth  Amendment,  dated as of August  1,  2001,  to  Employment
               Agreement between the Registrant and Steven Fialkow. Incorporated
               by reference to the 2001 Form 10-K.

10.7           Employment  Agreement  dated as of November  1, 2001  between the
               Registrant and Steven  Fialkow.  Incorporated by reference to the
               January 31, 2002 Form 10-Q.

10.8           Employment  Agreement  dated as of November  1, 2001  between the
               Registrant and Robert P. Heller. Incorporated by reference to the
               January 31, 2002 Form 10-Q.


<PAGE>

EXHIBIT                                 DOCUMENT
NUMBER                                  --------
------


10.9           Employment  Agreement  dated as of November  1, 2001  between the
               Registrant and Richard Garofalo. Incorporated by reference to the
               January 31, 2002 Form 10-Q.

10.10          Amended and Restated Asset Purchase  Agreement  dated October 15,
               1999 among Charles L. Glerum as Trustee for Optimum Care Services
               of Connecticut,  Inc., Optimum Home Health of Connecticut,  Inc.,
               Optimum Home Care of  Connecticut,  Inc.,  New England Home Care,
               Inc.,  Connecticut  Staffing  Works  Corp.  and  the  Registrant.
               Incorporated by reference to the  Registrant's  Current Report on
               Form 8-K dated November 11, 1999.

10.11          The Registrant's Employee Savings and Stock Investment Plan under
               Section  401(k) of the  Internal  Revenue  Code,  effective as of
               January 1, 1999.  Incorporated  by reference to the  Registrant's
               Quarterly  Report  on Form  10-Q  for the  fiscal  quarter  ended
               October 31, 1999.

10.12          Letter  Agreement  dated  February  20, 2000  providing a Secured
               Advised Line of Credit from the Bank of New York to National Home
               Health Care Corp.  Incorporated by reference to the  Registrant's
               Quarterly  Report  on Form  10-Q  for the  fiscal  quarter  ended
               January 31, 2000 (the "January 31, 2000 Form 10-Q").

10.13          Letter  Agreement  dated  February  20, 2000  providing a Secured
               Advised  Line of Credit  from the Bank of New York to New England
               Home Care, Inc. Incorporated by reference to the January 31, 2000
               Form 10-Q.

21.1*          List of Subsidiaries.

23.1*          Consent of Holtz Rubenstein & Co., LLP.

23.2*          Consent of BDO Seidman, LLP.

99.1*          Certification  of  Principal  Executive  Officer  pursuant  to 18
               U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

99.2*          Certification  of  Principal  Financial  Officer  pursuant  to 18
               U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

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*     Filed herewith